BIG IDEAS 2024

FOR INFORMATIONAL PURPOSES ONLYJANUARY 31, 2024

1

BIG IDEAS
2024
Annual Research
ReportARK Investment Management LLC. This is not a recommendation in relation to any named particular securities/cryptocurrencies and no warranty or guarantee is provided. Any references to particular securities/cryptocurrencies
are for illustrative purposes only. There is no assurance that the Adviser will make any investments with the same or similar characteristics as any investment presented. The reader should not assume that an investment
identified was or will be profitable. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE, FUTURE RETURNS ARE NOT GUARANTEED.

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Risks Of Investing In Innovation
Please note: Companies that ARK believes are capitalizing on disruptive innovation and developing technologies to displace older
technologies or create new markets may not in fact do so. ARK aims to educate investors and seeks to size the potential investment
opportunity, noting that risks and uncertainties may impact our projections and research models. Investors should use the content

BIG IDEAS 2024: DISCLOSURE

presented for informational purposes only, and be aware of market risk, disruptive innovation risk, regulatory risk, and risks related
to certain innovation areas.
Please read risk disclosure carefully.
RISK OF INVESTING IN INNOVATIONRAPID PACE OF CHANGEEXPOSURE ACROSS SECTORS AND MARKET CAPREGULATORY HURDLESDISRUPTIVEINNOVATIONPOLITICAL OR LEGAL PRESSURE

UNCERTAINTY AND UNKNOWNSàAim for a cross-sector understanding of technology
and combine top-down and bottom-up research.

Sources: ARK Investment Management LLC, 2023.

COMPETITIVE LANDSCAPEà

Aim to understand the regulatory, market, sector,
and company risks. (See Disclosure Page)

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Big Ideas 2024
Disrupting The Norm, Defining The Future

BIG IDEAS 2024: INTRODUCTIONARK Invest proudly presents "Big Ideas 2024: Disrupting the Norm, Defining the Future." A tradition since 2017,
Big Ideas offers a comprehensive analysis of technological convergence and its potential to revolutionize
industries and economies.
ARK seeks to deliver long-term capital appreciation by investing in the leaders, enablers, and beneficiaries of
disruptive innovation. With a belief that innovation is key not only to growth but also to resilience, ARK
emphasizes the necessity of a strategic allocation to innovation in every investor's portfolio. This approach aims
to tap into the exponential growth opportunities often overlooked in broad-based indices, while
simultaneously providing a hedge against the risks posed by incumbents facing disruption.

We hope you enjoy Big Ideas 2024.

TABLE OF CONTENTS

4

Technological Convergence5

Artificial Intelligence

19

Bitcoin Allocation

34

Bitcoin In 2023

43

Smart Contracts

53

Digital Consumers

64

Digital Wallets

75

Precision Therapies

87

Multiomic Tools & Technology

96

Electric Vehicles

104

Robotics

113

Robotaxis

122

Autonomous Logistics

133

Reusable Rockets

143

3D Printing

153

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Research By:

Brett Winton
Chief Futurist

BIG IDEAS 2024

ARK Venture Investment
Committee Member

Technological
Convergence
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

6

According to ARK’s research, convergence among disruptive technologies will define this decade.
Five major technology platforms—Artificial Intelligence, Public Blockchains, Multiomic Sequencing,
Energy Storage, and Robotics—are coalescing and should transform global economic activity.
Technological convergence could create tectonic macroeconomic shifts more impactful than the

CONVERGENCE

first and second industrial revolutions. Globally, real economic growth could accelerate from 3%
on average during the past 125 years to more than 7% during the next 7 years as robots reinvigorate
manufacturing, robotaxis transform transportation, and artificial intelligence amplifies knowledge
worker productivity.
Catalyzed by breakthroughs in artificial intelligence, the global equity market value associatedwith disruptive innovation could increase from 16% of the total* to more than 60% by 2030. As aresult, the annualized equity return associated with disruptive innovation could exceed 40%
during the next seven years, increasing its market capitalization from ~$19 trillion today to roughly$220 trillion by 2030.
*Throughout this section, we include public blockchain value as part of all calculations and forecasts of “equity market value.” Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range ofunderlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice
or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

CONVERGENCE

7

Public Blockchains

Five Innovation
Platforms Are
Converging And
Defining This
Technological Era

Upon large-scale adoption, all money and contracts likely will
migrate onto Public Blockchains that enable and verify digital
scarcity and proof of ownership. The financial ecosystem islikely to reconfigure to accommodate the rise of
Cryptocurrencies and Smart Contracts. These technologies
increase transparency, reduce the influence of capital andregulatory controls, and collapse contract execution costs. In
such a world, Digital Wallets would become increasingly
necessary as more assets become money-like, and corporations
and consumers adapt to the new financial infrastructure.
Corporate structures themselves may be called into question.

Multiomic
Sequencing

Artificial Intelligence

Computational systems and software that evolve with data cansolve intractable problems, automate knowledge work, andaccelerate technology’s integration into every economic sector. The
adoption of Neural Networks should prove more momentous than
the introduction of the internet and potentially create 10s of trillion
dollars of value. At scale these systems will require unprecedented
computational resources, and AI-specific compute hardware should
dominate the Next Gen Cloud datacenters that train and operate AI
models. The potential for end-users is clear: a constellation of AIdriven Intelligent Devices that pervade people's lives, changing theway that they spend, work, and play. The adoption of artificial
intelligence should transform every sector, impact every business,and catalyze every innovation platform.

Energy Storage

Declining costs of Advanced Battery Technology should cause
an explosion in form factors, enabling Autonomous Mobility
systems that collapse the cost of getting people and things fromplace to place. Electric drivetrain cost declines should unlock
micro-mobility and aerial systems, including flying taxis,
enabling business models that transform the landscape of cities.
Autonomy should reduce the cost of taxi, delivery, andsurveillance by an order of magnitude, enabling frictionlesstransport that could increase the velocity of e-commerce andmake individual car ownership the exception rather than therule. These innovations combined with large-scale stationary
batteries should cause a transformation in energy, substituting
electricity for liquid fuel and pushing generation infrastructure
towards the edge of the network.

The cost to gather, sequence, and understanddigital biological data is falling precipitously.
Multiomic Technologies provide researchscientists, therapeutic organizations and healthplatforms with unprecedented access to DNA,
RNA, protein, and digital health data. Cancer careshould transform with pan-cancer blood tests.
Multiomic data should feed into novel Precision
Therapies using emerging gene editing techniquesthat target and cure rare diseases and chronic
conditions. Multiomics should unlock entirely new
Programmable Biology capabilities, including thedesign and synthesis of novel biologicalconstructs with applications across industries,
particularly agriculture and food production.

Robotics

Catalyzed by artificial intelligence, Adaptive Robots canoperate alongside humans and navigate legacy
infrastructure, changing the way products are made andsold. 3D Printing should contribute to the digitization of
manufacturing, increasing not only the performance andprecision of end-use parts but also the resilience of
supply chains. Meanwhile, the world’s fastest robots,
Reusable Rockets, should continue to reduce the cost oflaunching satellite constellations and enable
uninterruptible connectivity. A nascent innovation
platform, robotics could collapse the cost of distancewith hypersonic travel, the cost of manufacturing
complexity with 3D printers, and the cost of production
with AI-guided robots.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

8Converging Technologies Are Generating A Historic Technological Wave
Estimated Economic Impact of General Purpose Technologies(Annual Percentage Point Additions to Real GDP Growth And Consumer Surplus)

18

Internal Combustion Engine
Electricity
TelephoneRadio
Refrigeration
Air Conditioning

8

Steam Engine

3-2

Railroads
Telegraph
Photography
BicycleChemicals & Synthetic
PCs
Materials
BiotechAutomobile
Fiber optics
Assembly Line
Integrated Circuit
Television
Nuclear PowerJet Engine
Containerization

Internet
Cell phones
GPS
The Web

AI

E-Commerce
Renewables

Intelligent Devices
Multiomic Technology
Precision Therapies
Programmable Biology
Digital Wallets
Smart Contracts
Cryptocurrencies

1780
1785
1790
1795
1800
1805
1810
1815
1820
1825
1830
1835
1840
1845
1850
1855
1860
1865
1870
1875
1880
1885
1890
1895
1900
1905
1910
1915
1920
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
F
2025
2030
2030 F

CONVERGENCE

13

3D Printing
Reusable Rockets
Adaptive robots
Advanced Batteries
Autonomous Mobility
Cloud Computing

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying sources, including Bekar et al. 2017, which may be provided upon request. The chart uses GPT 4 prompting to survey acomprehensive list of general purpose technologies using the identification framework detailed therein. Where available, academic literature is also used to assess attributable economic impact. A GPT-4 scoring rubric
assesses technology-by-technology impacts. The impact measured directly is matched against the scoring to tune all scores to produce technology-by-technology estimates of economic impact (even when direct measuresof economic impact are unattainable). Consistent with General Purpose Technology theory, these technologies are assumed to go through a period of investment in which economic impact is negative before productivity
advances begin to realize into economic data. All technologies are assumed to have the same diffusion and realization cycle. If recent technologies are assumed to diffuse more quickly, the current wave would appear
steeper. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past
performance is not indicative of future results.

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AI Serves As The Central Technology Catalyst
The Technology Convergence matrix illustrates the relationships between and among technologies.
Cryptocurrencies

Convergence Score

Smart
Contracts

HighestDigitalWallets
Precision
Therapies

High

Programmable
BiologyTechnology

CONVERGENCE

Multiomic
Technology

NeuralNetworks

Mid

Next Gen
Cloud
Intelligent
Devices

Low

Autonomous
Mobility
Advanced Battery
Technology

LowestRenewable
Rockets
Adaptive
Robotics
3D
Printing
Cryptocurrencies

Smart
Contracts

DigitalWallets

Precision
Therapies

Multiomic Programmable
Technology
Biology

NeuralNetworks

Next Gen
Cloud

Intelligent
DevicesAutonomous
Mobility

Advanced
Battery
Technology

Renewable
Rockets

Adaptive
Robotics

3D
Printing

Catalyzing Technology
More detailed version of this graphic, including detailed scoring information and justification available here. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data fromexternal sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation
to buy, sell, or hold any particular security. Past performance is not indicative of future results.

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AI Is Accelerating Faster Than Forecasters Anticipated100

Pre GPT-3 average
80 years

Expected Years Until Launch Of A General Artificial Intelligence System(Log Scale)
OpenAI announces
GPT-3

Google demonstrates advanced

50
years

conversational agent, LLaMda2

Number of Years

CONVERGENCE

ChatGPT launches to the public
34 years
GPT-4 launches
18 years
10

8 years

If fore
c
If f
o

rec

ast

err
or

co

nt
inu
e

ast is w

ell-tun
ed

s

1
2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Sources: ARK Investment Management LLC, 2024, based on data from Metaculus, including benchmark details, as of January 3, 2024. Benchmark broadly requires the successful passage of an adversarial two-hour Tuning test, broad
success on a Q&A knowledge and logic benchmark, and the successful interpretation of and execution complex model car assembly instruction, all within a single system. Green lines are derived estimates for time to general
purpose AI (strongly formulated) based upon forecasts for a weaker benchmark. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or arecommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

11

Individual Technology Advances Can Coalesce And Cascade Into Massive
New Market Opportunities
Neural Networks

Robotaxi Manufacturing Costs(Per Vehicle, 2024)*+

Battery electric drivetrains
reduce robotaxi operating
costs by 60%.
Robotaxi Operating Cost Per MileBy Drivetrain Type=

Autonomous Mobility
The combination of AI and battery
electric drivetrains enables robotaxi
systems to scale.

Adaptive Robotics

200

$0.31
Thousands, $CONVERGENCE

Advanced AI enables robotaxis
to rely on fewer, less expensive
sensors.

Advanced Battery Technology

150

100

$0.12
50

Waymo

Tesla

5 LIDARs, 29 cameras, 6
radars, 8 ultrasonicsensors

9 CamerasInternal combustion

Electric

In addition to better batteries and AI,
general purpose robots will require
better:• Electric motors• Power electronics• Sensors• Power-efficient compute
As robotaxis scale, the cost of eachtechnology should decline according
to its learning curve.

*Waymo manufacturing costs are estimated based upon public statements. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, which may be provided
upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

12

The Impact Of These Technologies On The Economy Should Prove Dramatic
Economic Impact of Select Major Technologies(Cumulative Increase In Real GDP Attributable to Technology After Introduction)
140%

120%

CONVERGENCE

100%

80%

60%
40%

20%
0%
IndustrialRobots
robotsIndustrial
(1997
to
2007)
(1997 toInformation Technology(1995 to 2005)

Adaptive Robotics
robotics **Adaptive
(2023
to
2030)
(2023 to 2030)

Autonomous Mobility *(2023 to 2030)

Steam
Steam engine
Engine
(1830
to
1910)
(1830 to 1910)

AI *(2023 to 2030)*Adaptive Robotics, Autonomous Mobility, and AI Impact are ARK Invest estimates. AI estimate includes consumer surpluses that may not be captured in traditional economic statistics. IT productivity impact likely
also undercounts consumer surplus. Industrial Robot and IT impact measures impact on US, Europe, and Japanese economies. Steam Engine impact is measured against the UK economy. Sources: ARK Investment
Management LLC, 2024, based on data from Crafts 2004, O’Mahony et al. 2009, and McKinsey Global Institute 2017. Forecasts are inherently limited and cannot be relied upon. For informational purposes only andshould not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

13Technological Innovation Could Be Disruptive Enough To Dominate Global
Equity Market Capitalizations
2023
Equity Market Cap Estimate
Non-innovation
Disruptive Innovation
Total$98 trillion$19 trillion$117 trillion

2030
Equity Market Cap Forecast
Non-innovation$140 trillion
Disruptive Innovation$220 trillion
Total$360 trillion

Annual Growth
Forecast
3%
42%
17%

CONVERGENCE

Multiomic
Sequencing
Robotics
PublicBlockchains

EnergyAI

Storage

ArtificiaI Intelligence
37%
Energy Storage
50%
Public Blockchains48%
Robotics
78%
Multiomic Sequencing
39%

Note: Forecasted numbers are rounded. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including the World Federation of Exchanges and the MSCI ACWI IMIInnovation Index which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation
to buy, sell, or hold any particular security. Past performance is not indicative of future results.

14

Expectations For Public Blockchains

CONVERGENCE

Although the scenarios described in the table below are written in present tense, they are forecasted, possible outcomes based on ARK's views. These possible outcomes may not be realized in the
future due to a number of uncertainties. The information provided should not be considered investment advice and should not form the basis of any investment decision.
Technology

2040 Possibilities

ARK’s 2030 Expectation of Progress

Cryptocurrencies

Cryptocurrencies have displaced most permission-based, centrally
controlled monetary systems, enabling financial ecosystems to reformulate
around a digital asset that can eliminate counterparty risk while continuing
to facilitate transaction flows. The reformulation began at the edges of the
traditional financial system in geographies with broken money systems andin markets otherwise mis-served by traditional financial intermediaries. In
developed markets, cryptocurrencies initially served as a store of value,
providing little direct utility. Over time, the efficiencies of a truly neutral
digital currency, primarily bitcoin, have prevailed over other financial
architectures.

Global money supply has grown in tandem with GDP, and cryptocurrencies now
account for ~10% of the total. Little of that value accrual is attributable to thedirect displacement of money though there are instances in emerging markets.
Much of the appreciation is a function of low single-digit percent allocations byinstitutional and high net worth individuals as well as corporate and nation-statetreasuries. Cryptocurrencies continue to displace gold as a flight-to-safety asset,
taking 40% share of the market. Utility use cases such as remittances and global
settlements account for ~10% and~ 5% of volumes, respectively

Smart Contracts

Most contracts have migrated to open-source protocols that enable andverify digital scarcity and proof of ownership. Risk-sharing arrangements are
more transparent, assets of all sorts are securitized, bought, and sold moreeasily, and counterparty risks have diminished substantially. The importanceof traditional financial intermediaries has dwindled, even as more humanactivity becomes commercialized. Decentralized protocols, enabled bybalance-sheet-light digital wallet platforms, facilitate most traditional
financial functions. Consumer internet services rely on business models
enabled by digital asset ownership. Every corporate entity and every
consumer has adapted as centralized corporate structures themselves arecalled into question.

Global financial assets as percent of GDP have continued to increase, with lessthan 5% secured by smart contracting platforms—a dynamic consistent with the
adoption curve of dialup internet. At 1%, the gross take from tokenized assets on
decentralized protocols is less than a third of the fees that traditional financial
institutions extract. Application protocols, which pay a larger share of fees toincentivize network participants, account for 75% of gross decentralized protocol
revenues. The blended net take rate between application layer protocols andLevel 1 protocols is roughly 60bps.

Digital wallets enable nearly every person with a connected device totransmit and receive money instantly, fundamentally transforming thethrough-flow of commercial and financial experiences. Digital wallets thatfacilitate wholesale pricing of financial services for individual users havedisrupted retail banking relationships, fundamentally transforming consumer
relationships with financial service providers. In addition to their financial
functions, digital wallets are distribution platforms for a variety of digital
services—from ride-hailing to e-commerce—and are secure repositories for
digital health and other sensitive data. Traditional financial service
institutions and their associated payment processing value chains have given
way largely to internet-enabled digital wallets for most economic activity.

Roughly 90% of smartphone users rely on digital wallets to some degree. The
majority uses digital wallets as the front-end for more than half of meaningful
financial functions. Digital wallet platform providers continue to rely on traditional
ecosystems to facilitate financial activities like lending but can extract leadgeneration fees of 5-20% for delivering customers to those institutions. They also
can capture 3-10% commerce facilitation fees for e-commerce activity directed
through their platforms.

Digital Wallets

Sources: ARK Investment Management LLC, 2024. In the above table, we characterize the convergent technological capabilities that we believe may manifest by 2030 and 2050. We stress that these scenarios, written in thepresent tense, are possible outcomes—not assured outcomes—and that the future may play out differently. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are
inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.

15

Expectations For Multiomic Sequencing
Although the scenarios described in the table below are written in present tense, they are forecasted, possible outcomes based on ARK's views. These possible outcomes may not be realized in the future
due to a number of uncertainties. The information provided should not be considered investment advice and should not form the basis of any investment decision.
Technology

CONVERGENCE

Precision Therapies

Multiomic Technologies

Programmable Biology

2040 Possibilities

ARK’s 2030 Expectation of ProgressTechnology enables the manipulation of molecular biological systems,
catalyzing a new generation of more efficacious and durable precision
therapies. CRISPR-based gene-editing enables the manipulation of DNA
directly with increasing specificity. RNA-acting therapeutic techniques
restrict the area of DNA that can be transcribed into proteins. AI-advances
enable the targeting of specific proteins that cause underlying disorders.
These breakthroughs have shortened development timelines for andincreased the efficacy of curative therapies that command higher prices
than traditional therapies. Researchers are aiming to cure most rarediseases. Traditional health service spending declines, ceding economic
terrain to molecular cures.
Catalyzed by the precipitous fall in sequencing costs, researchers andclinicians routinely collect patients’ epigenomic, transcriptomic, andproteomic data. With increasingly comprehensive digital health readouts
from intelligent devices and emerging AI tools, they align this panoply of
multiomic data to understand, predict, and treat disease. As a result, cancer
care has transformed completely: multiomic technologies detect cancer at
early stages, target treatment more precisely, and provide recurrencemonitoring. Regular blood-based pan-cancer tests are a standard of care forpatients in middle age. Multiomic technology has increased biotech R&D
efficiency, as clinical trials target patient populations and measureoutcomes more precisely and easily. Combined with AI, multiomic
technology has transformed the relationship between patients and healthsystems. Digital health providers, diagnostic tool companies, and molecular
testing companies are leading the charge. Legacy drug franchises and healthservice systems have lost their prominence. Wasteful healthcare spending
declines as healthy lives extend.

Precision therapies make up 25% of newly released drugs. By improving the quality of life,
lowering ancillary medical costs, and often effectively curing diseases, they commandaverage price premiums of 7x relative to traditional drugs. Combined with expected
improvements in R&D efficiencies, these drugs add 15% or ~$300 billion to drug revenues in
2030.

AI tools, improved genomic synthesis techniques, and scalable biologicalmanufacturing techniques enable novel, lower cost biological constructs
with predictable performance, powering a renaissance in agriculture andmaterials science. Programmable biology enables breakthroughs inmaterials science and bio-based fuels that increase food production andreduce environmental externalities. Molecular biological primitives offer a
substrate for new robust computation architectures.

Still restricted to early stage and development projects, gene synthesis generates $10
billion in annual revenue. Programmable biology platforms capture 10% of precision
therapy revenue. Those platforms generate another $30 billion in revenue with grossmargins at ~70%, EBITDA margins in the 35% range, and free cash flow margins at ~20%.

At full penetration, R&D efficiency associated with drug development could double, thanks
to AI-enhanced multiomic technology. By 2030, nearly all new drug development programs
incorporate multiomics into preclinical R&D, and ~50% incorporate AI into clinicalprograms. Realized returns on R&D have improved by 10% with line-of-sight to a near
doubling of R&D returns by 2035. Early detection multi-cancer blood tests have become
standard of care as they have cut cancer mortality by 25% for some age cohorts. In
developed markets, 30% of patients benefit from the new diagnostics regime.

Sources: ARK Investment Management LLC, 2024. In the above table, we characterize the convergent technological capabilities that we believe may manifest by 2030 and 2050. We stress that these scenarios, written in the present
tense, are possible outcomes—not assured outcomes—and that the future may play out differently. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently limited
and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.

16

Expectations For Energy Storage

CONVERGENCE

Although the scenarios described in the table below are written in present tense, they are forecasted, possible outcomes based on ARK's views. These possible outcomes may not be realized in
the future due to a number of uncertainties. The information provided should not be considered investment advice and should not form the basis of any investment decision.

Technology

2040 Possibilities

ARK’s 2030 Expectation of Progress

Autonomous Mobility

Robots move people and parcels from place to place and have changed theeconomics of physical movement entirely. The cost of taxi, delivery, andobservation have fallen by an order of magnitude. Traveling by robotaxi is thenorm and owning a personal vehicle the exception. Frictionless drone androbot delivery has catalyzed the velocity of ecommerce. The data generated
by autonomous mobility systems provide pervasive, real-time insights into thestate of the world. Consumers and businesses that harness autonomous
mobility platforms are benefitting, while prior incumbents in the automotive,
logistics, retail, and insurance sectors have been upended.

Autonomous robotaxis have transformed global transport, as point-to-pointtransportation is available in nearly every country at an average price of ~$.50 per
mile. Given the compelling price-point and utility, robotaxis have traveled 13
trillion vehicle miles and are gaining traction. Autonomous robotaxi platforms
charge platform fees or take-rates of 50%+, generate ~50% operating margins,
and give asset owner-operators the opportunity to generate reasonable rates ofreturn on capital. The number of autonomous vehicles facilitating this travel is~100 million, and most of the incremental vehicle production is autonomouscapable.

Advanced Battery
Systems

Declining battery costs have ignited a Cambrian explosion in mobility form
factors, pushing electrical supply out to end-nodes on networks. Electricvehicles dominate transport as internal combustion dies. Micro-mobility andaerial systems that include flying taxis enable innovative business models thattransform urban landscapes. All these innovations drive fundamental demandfor electrical energy at the expense of liquid fuel. They also provide electricalenergy more efficiently, reducing the vulnerability of grids, operational
expenses, and the capital intensity of transmission and distribution.
Oil demand is in decline, and traditional automotive manufacturers andsuppliers have been displaced by a smaller number of vertically integrated
technology providers.

As ridership shifts to electric autonomous platforms, the number of autonomous
capable EVs sold annually is ~74 million, accounting for most of the automotive
market. At an average selling price of ~$20,000, EV manufacturers generate $1.4
trillion in annual revenue, ~20% gross margins, and ~10% EBIT margins. With
manufacturing consolidation, margins increase. Batteries account for ~20% of thevalue of EVs. Much like that of EVs, battery manufacturing is capital-intensive andlow-margin. Supplying the EV OEMs, battery manufacturers generate revenue of$300 billion per year. Stationary energy storage requires a volume of batteries
roughly equivalent to that consumed by EVs, generating another $300 billion inrevenue.

Sources: ARK Investment Management LLC, 2024. In the above table, we characterize the convergent technological capabilities that we believe may manifest by 2030 and 2050. We stress that these scenarios, written in thepresent tense, are possible outcomes—not assured outcomes—and that the future may play out differently. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are
inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.

17

Expectations For Artificial Intelligence
Although the scenarios described in the table below are written in present tense, they are forecasted, possible outcomes based on ARK's views. These possible outcomes may not be realized
in the future due to a number of uncertainties. The information provided should not be considered investment advice and should not form the basis of any investment decision.
Technology

CONVERGENCE

Neural Networks

Next Gen CloudIntelligent Devices

2040 Possibilities

ARK’s 2030 Expectation of Progress

Fed by massive amounts of data, computational systems and software aresolving previously unsolvable problems, automating knowledge work, andaccelerating the integration of technology into all economic processes. As
costs have plummeted, custom software is improving with every AI model
enhancement and connecting the world. Learning systems are blazingly fast,
their impact as momentous as the introduction of the microprocessor,
transforming every sector and region.

The cost of training AI models has fallen more than 40,000-fold which, whencombined with aggressive investments in AI hardware, has catapulted
aggregate AI capability roughly 600,000-fold since 2023. Adopted by 50% ofknowledge workers, AI software systems have improved their productivity by 9x
on average. Consistent with other software products, enterprises pay 10% of the
productivity increase to access the software.

Cloud tools train the AI models that dominate software stacks and thesoftware connections that stitch together the AI-run world. The
infrastructure-as-a-service providers, chip manufacturers, and toolmanufacturers that facilitate the training of neural networks have enjoyed amulti-decade demand cycle. Software development has been
democratized, and the companies providing API hooks that stitch together
interoperable software layers experience unprecedented demand.

AI hardware spend of $1.3 trillion supports $13 trillion in AI software sales andaccommodates traditional software gross margins of 75%. Three types ofcustomers support the demand for AI hardware--infrastructure-as-a-service
providers, software companies, and AI foundation model providers—whichshould generate 20% cashflow margins, consistent with those of chip
manufacturers.

AI powers a new class of intelligent devices in the home and on the go.
Fixed internet-and AI-powered infrastructure exists in homes and othersocial environments, transforming distribution for all media providers. Endusers interface with the world in completely new ways, and data on theirconsumption preferences spawn new business models and services.
Commerce and wagering permeate entertainment experiences, enablingand catalyzing new advertising formats and content monetization. The show
is the store. Linear TV is obsolete, as digital curation and direct consumer
preference drive visual content. Linear content is ceding ground tointeractive experiences, sometimes subtly. AI-mediated glasses andheadsets thread through the fabric of everyday life.

Consumer spending on intelligent device hardware continues its uptrend to~$60 per internet user per year. Time spent connected grows dramatically tohalf of waking leisure hours, or 20 trillion globally. Digital experiences continue
to monetize at a discount to in-person experiences and yield $0.25 per hourspent online in revenue to platform providers. Between device spend anddigital entertainment experiences, $5.4 trillion in revenue accrues to intelligent
devices, entertainment, and social platforms. Advertising and commercecomprise 80% of that revenue.

Sources: ARK Investment Management LLC, 2024. In the above table, we characterize the convergent technological capabilities that we believe may manifest by 2030 and 2050. We stress that these scenarios, written in thepresent tense, are possible outcomes—not assured outcomes—and that the future may play out differently. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are
inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.

18

Expectations For Robotics

CONVERGENCE

Although the scenarios described in the table below are written in present tense, they are forecasted, possible outcomes based on ARK's views. These possible outcomes may not be realized in
the future due to a number of uncertainties. The information provided should not be considered investment advice and should not form the basis of any investment decision.
Technology

2040 Possibilities

ARK’s 2030 Expectation of Progress

Reusable Rockets

Reusable rockets are inexpensive and have spawned new business models.
Low-earth orbit constellations connect every smartphone user on earth to a
censor-resistant data feed. Hypersonic point-to-point travel is becoming areality, disrupting long-haul flight, transforming military asset delivery, andshrinking global supply chains. Extra-planetary human exploration has
begun ramping.

Led by SpaceX’s Starship launch volumes, a 40,000 strong satellite network is
in orbit, facilitating direct-to-satellite communications for nearly all
smartphones and delivering broadband-type speeds to ships, RVs, airplanes,
and rural residents in developed and developing countries. Given the relative
ease with which customers can be on-boarded—a power outlet, an antenna,
and a clear path to the sky—most customers are engaged in an addressable
market totaling $130 billion annually.

Adaptive Robotics

Adaptive robots powered by artificial intelligence are transforming the
economy. The cost of humanoid robots that are backward-compatible withexisting infrastructure has dropped below that of human manufacturinglabor for many applications. Previously intractable household tasks are
submitting to automation at price points that create compelling endmarkets. Fleets of robots grow more performant with every AI software
upgrade. A virtuous circle of fleet data generation and AI model training
drives performance forward. Manufacturing productivity growth accelerates
as a wider array of physical goods submit to technologically-driven costdeclines. Robots continue to penetrate the service sector as well. The
economy has entered a period of undeniable and unprecedented explosive
growth.

Adaptive robots have penetrated manufacturing processes enough to increase
productivity by 15%, and annual unit sales of humanoid robots have grown to
10% of the number of humans in the manufacturing workforce. Less expensive
robots in human form-factors have begun to populate households, particularly
in developed countries. While still limited in capability, these robots address athird of household chores, their sticker prices justified by the time thathousehold members save. Robot manufacturers enjoy margins at the higher
end of capital equipment suppliers, thanks to software.

3D printing has removed design barriers and reduced cost, weight, and timeto production, dramatically transforming traditional manufacturingmethods. Healthcare tools created with 3D printing are personalized andcustom-made, resulting in better experiences for both patients and doctors.
Lighter 3D-printed aerospace parts reduce global emissions and give flightto new aircraft both for earth and outer space. Replacement parts acrossindustries are printed on demand at a fraction of previous costs, ultimately
short-circuiting supply-chain shortfalls. 3D printing enables artificial
intelligence to design parts once impossible to manufacture.

3D printing continues to dominate the prototyping market and has penetrated
substantial parts of the intermediate tooling market, enabling low-cost design
iterations across injection molding and metal casting applications. Most
important to industry growth, 3D printing has begun to see meaningful uptake
into end-use applications across aerospace and automotive, markets thatcollectively sell more than $4 trillion in equipment per year. Across allindustries, nearly $900 billion in end-use parts could adopt 3D printing, thoughthat penetration remains in the teens.

3D Printing

Sources: ARK Investment Management LLC, 2024. In the above table, we characterize the convergent technological capabilities that we believe may manifest by 2030 and 2050. We stress that these scenarios, written in thepresent tense, are possible outcomes—not assured outcomes—and that the future may play out differently. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently
limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.

BIG IDEAS 2024

19

Research By:

Frank Downing

Jozef Soja

Director of Research,
Next Generation Internet

Research Associate

Artificial
Intelligence
Scaling Global Intelligence
And Redefining Work
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

20With superhuman performance on a wide range of tests, AI models like GPT-4
should catalyze an unprecedented boom in productivity. Jolted by ChatGPT’s“iPhone” like moment, enterprises are scrambling to harness the potential of

ARTIFICIAL INTELLIGENCE

artificial intelligence (AI).
AI promises more than efficiency gains, thanks to rapidly falling costs and opensource models. If knowledge worker productivity were to quadruple by 2030, as we
believe is likely, growth in real GDP could accelerate and break records during thenext five to ten years.

Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

21

ChatGPT Delighted Consumers And Amazed Enterprises
Building on years of progress since Google invented transformer architecture in 2017, ChatGPT catalyzed the public’s
understanding of generative AI. No longer a tool just for developers, ChatGPT’s simple chat interface enabled anyone speaking
any language to harness the power of large language models (LLMs). In 2023, enterprises scrambled to understand and deploy
generative AI.

ChatGPT

WeChatTikTokInstagram

YouTube

FaceBook

The Number of AI Mentions Tripled On Earnings Calls
Alphabet

100

180

90

160

Number of Mentions

80
70(Millions)

Monthly Active Users

ARTIFICIAL INTELLIGENCE

ChatGPT Users Hit 100 Million Users In Two Months

60
50
40
30
20

80
60

4

5

Post-ChatGPT Average

Pre-ChatGPT Average

40
0

3

Microsoft

100

0
2

Meta

120

20
1

Amazon

140

10
0

Apple

Q4'21

Q1'22

Q2'22

Q3'22

Q4'22

Q1'23

Q2'23

Q3'23

Years
*values between 0 and 100 million users are estimates
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of data sources, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational
purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

22

AI Already Has Boosted Productivity Significantly
Coding assistants like GitHub Copilot and Replit AI are early success stories that have boosted the productivity and job satisfactionof software developers. AI-powered assistants are increasing the performance of knowledge workers and, interestingly, benefiting
underperforming workers relatively more than high performers.
Productivity of Developers On Coding

ARTIFICIAL INTELLIGENCE

Tasks Using Github Copilot in 2023

Productivity of Consultants Using Gen AI In 2023
Task Speed

Task Quality

1.25x

1.17x

2.2x
1.43x

Without Copilot

With Copilot

Without Gen AI

With Gen AI

Without Gen AI

With Gen AI

Task Quality, Top 50th Percentile of Workers
Task Quality, Bottom 50th Percentile of Workers
Sources: ARK Investment Management LLC, 2024. The data used to analyze productivity were collected from several different studies with varying numbers of participants and definitions of task quality. The sources used
are Dell’Acqua et al. 2023 and GitHub 2022. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell,or hold any particular security. Past performance is not indicative of future results.

23Foundation Models Are Improving Across Domains
With larger training datasets and more parameters, GPT-4 outperforms GPT-3.5 significantly. Increasingly, foundation models are
becoming “multimodal”—supporting text, images, audio, and video—and are not only more dynamic and user friendly, but also
more performant.
GPT-3.5, GPT-4, and Claude 2 Results on Professional and Academic Exams
GPT-4

Claude 2

GPT-4 Vision

100%
90%
80%

Percentile

70%
60%
50%
40%
30%
20%
10%

l

AP

SA

T

Ve
rb
a

GR
E

EB
RW
En
GR
vi
E
ro
W
nm
ri t
in
en
g
ta
lS
Un
ci
if o
en
rm
ce
Ba
rE
xa
m
SA
T
M
AP
at
h
US
H
ist
or
y
AP
US
LS
AT
G
ov
er
nm
AP
en
t
Ar
tH
ist
or
AP
y
St
at
i st
ic
s
A
AP
P
Bi
M
ol
ac
og
ro
y
ec
on
om
AP
ic
s
Ps
AP
yc
h
M
ol
ic
og
ro
y
ec
o
no
GR
m
E
ic
Q
s
ua
nt
ita
AP
t iv
e
Ch
em
ist
ry
AP
Ph
AP
ys
ic
W
s
or
2
ld
Hi
st
or
y
AM
AP
C
12
Ca
AP
lc
ul
En
us
gl
is
BC
h
AP
La
En
ng
ua
gl
is
ge
h
Li
te
ra
tu
re
Co
AM
de
C
fo
10
rc
es
Ra
ti n
g

BO
*S

em

ifi
na
l

20

20

0%

US
A

ARTIFICIAL INTELLIGENCE

GPT-3.5*USA Biology Olympiad, a prestigious national competition testing high school students in biology. Sources: ARK Investment Management LLC, 2024, based on data from OpenAI and Anthropic as of Jan. 9, 2024. Forecasts
are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is
not indicative of future results.

24

Text-To-Image Models Are Reinventing Graphic Design
Eight years after researchers at the University of Toronto introduced the first modern text-to-image model, the output from image
models now rivals that of professional graphic designers. A human designer can create an image—like a herd of elephants walking
across a green grass field—in several hours for several hundred dollars. Text-to-image models can produce the same graphic inseconds for pennies. Professional apps like Adobe Photoshop and consumer apps like Lensa and ChatGPT are integrating image

ARTIFICIAL INTELLIGENCE

models into their products and services.

A herd of elephants walking across a green grass field

February 2016alignDRAW

February 2022
Midjourney v1

November 2022
Midjourney v4

December 2023
Midjourney v6

Sources: ARK Investment Management LLC, 2024. Images sourced from Masimov et al. 2016 and Midjourney. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be
considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

25

The Cost Of Authoring The Written Word Has Collapsed
Over the past century, the cost of authoring written content has been relatively constant in real terms. During the past two years,
as the writing quality of LLMs has improved, the cost has collapsed.

$1,000$100

GPT4 32k$0.16Median GRE
Analytic Writing

$10

$1

Claude 2$0.04
Top Decile GRE
Analytic Writing

$0.10
$0

Post 1997 assumes constant words per employed writer over time
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of data sources as of Jan 9, 2024, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

2022

2019

2016

2013

2010

2007

2004

2001

1998

1995

1992

1989

1986

1983

1980

1977

1974

1971

1968

1965

1962

1959

1956

1953

1950

1947

1944

1941

1938

1935

1932

1929

1926

1923

1920

1917

1914

1911

1908

1905

$0
1902

Cost Per 1000 Words Written, 2023 Dollars, Log Scale

ARTIFICIAL INTELLIGENCE

The Cost of Authoring Written Content

26

AI Training Performance Is Improving Rapidly
AI researchers are innovating across training and inference, hardware, and model designs to increase performance and lower
costs.
Other Algorithmic Innovations

Model Training Performance Gains
Moore’s Law Accelerator Optimizations
Increase

Decrease

Algorithmic Optimizations
Total

>5x

• Llama2 suggests superior writing abilityof LLMs is fundamentally driven by

ARTIFICIAL INTELLIGENCE

reinforcement learning from human
feedback (RLHF)• Optimized prompts can outperform
human prompts by over 50%• Speculative Decoding speeds up
inference 2-3x on certain models

Base = 1x• Flash Attention 2 results in a 2.8x2023 Performance

NVIDIA’s Outperformanceof Moore’s Law

Moore’s Law
Predicted Improvement

Chinchilla
Optimal Scaling

training speedup in GPT models

Other Software
Innovations
2024 Performance
Forecast

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of data sources, including Benaich 2023, Touvron et al. 2023, Yang et al. 2023, Leviathan et al. 2022, and Dao 2023, which are available
upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular
security. Past performance is not indicative of future results.

27

Training Costs Should Continue To Fall 75% Per Year
According to Wright’s Law, improvements in accelerated compute hardware should reduce AI-relative compute unit (RCU)
production costs by 53% per year, while algorithmic model enhancements could lower training costs further by 47% per year. In
other words, the convergence of hardware and software could drive AI training costs down by 75% at an annual rate through 2030.
AI Training Hardware Cost
Predicted $ / RCU

Actual Compute

Estimated Compute

1.000$100,000.00$10,000.00

0.100$100.00$10.00(Log Scale)

TFS-Days*(Log Scale)$1,000.00$ / RCU

ARTIFICIAL INTELLIGENCE

Actual $ / RCU

AI Software Training Cost Using Neural Networks

0.010

0.001

$1.00

0.000
$0.10

0.000

$0.01
0

1

100

10,000

Cumulative RCUs Produced(Millions) (Log Scale)

1,000,000

100,000,000

0

1

100

10,0001,000,000

Cumulative RCUs Produced(Millions) (Log Scale)*TFS-Days is a measure of compute required to train a model. Wright’s Law states that for every cumulative doubling of units produced, cost will fall by a constant percentage. Sources: ARK Investment Management LLC, 2024.
This ARK analysis is based on a range of data sources as of Jan. 9, 2024, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be
considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

28

As Production Use Cases Emerge, AI Focus Is Shifting To Inference Costs
After focusing initially on LLM training cost optimization, researchers now are prioritizing inference costs. Based on enterprisescale use cases, inference costs seem to be falling at an annual rate of ~86%, even faster than training costs. Today, the inference
costs associated with GPT-4 Turbo are lower than those for GPT-3 a year ago.

ARTIFICIAL INTELLIGENCE

GPT-3 and GPT-4 API Inference Costs
Per 1,000 Tokens$0.08

GPT-4-32k

$0.07
$0.06

GPT-3

GPT-4-32k:
Context
Window:
32k Tokens
Speed:
12 Tokens/Sec$0.05

86% Annualized Cost Decline$0.04

92% Annualized Cost Decline

$0.03

GPT-3

$0.02

GPT-4 Turbo$0.01

GPT-3.5 Turbo$11/18/2021

9/1/2022

11/6/2023

3/14/2023

GPT-4 Turbo:
Context Window:
128k Tokens, ↑4x
Speed:
44 Tokens/Sec, ↑4x

11/6/2023

Date of Price Change
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of data sources, including Patel and Kostovic 2023, and ARK Investment Management LLC 2023, which are available upon request.
Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past
performance is not indicative of future results.

29

The Open-Source Community Is Competing With Private Models
Challenging closed-source models from OpenAI and Google, the open-source community and its corporate champion, Meta, aredemocratizing access to generative AI. On balance, the performance of open-source models is improving faster than that ofclosed-source models, helped recently by models from China.
Open Source vs Private Models
Open Source
Open Source (Doesn't Outperform Previous Models on 5-Shot MMLU)

1.0

Absolute Log Error MMLU Performance

ARTIFICIAL INTELLIGENCE

5-Shot MMLU Performance

PrivatePrivate (Doesn't Outperform Previous Models on 5-Shot MMLU)

Flan-PaLM 2 (Alphabet)

0.9

Claude 2 (Anthropic)
PaLM-2 (Alphabet)
Claude 1.3 (Anthropic)

0.8
0.7

Gemini Ultra (Alphabet)

Qwen-72B (Alibaba, China)

Flan-PaLM (Alphabet)

Yi-34B (01.AI, China)

PaLM 540B (Alphabet)
Chinchilla 70B (Alphabet)

0.6
0.5

Mixtral 8x7B (Mistral)
Falcon 180 (TII, UAE)
LlaMA 2 70B (Meta)
LlaMA 65B (Meta)
Flan-T5-XXL (Alphabet)

GPT-2 1.5B (OpenAI, Fine-Tuned)

Average Human Performance

0.2

Grok-1 (X.ai)

GPT-3.5 (OpenAI)

GPT-3 (OpenAI, Fine-Tuned)

0.4
0.3

GPT-4 (OpenAI)

0.1
10/27/2018

5/15/201912/1/20196/18/2020

1/4/2021

7/23/2021

2/8/2022

8/27/2022

3/15/2023

10/1/2023

4/18/2024

Note: The chart’s trendlines are fit to the most performant open- or closed-source models on 5-Shot MMLU (Massive Multitask Language Understanding) at the time of their release. Sources: ARK Investment Management LLC,
2024. This ARK analysis is based on a range of data sources as of Jan. 9, 2024, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be
considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

30

Language Model Performance Advances Require Nuanced Techniques
GPT-4 performs significantly better than the average human on standardized education tests, from the SAT to the Advanced
Sommelier exam. Yet, it lags human-level capability in commonsense reasoning, as measured by WinnoGrande. Stanford’sframework—Holistic Evaluation of Language Models (HELM)—is one of the most comprehensive, continuously updated evaluation

HELM Evaluation Metrics

Select GPT-4 Benchmark Results
Human Avg.

GPT-4

Accuracy

Comparison with ground truth data

Calibration

Probability distribution assessment

Robustness

Stress testing with perturbed inputs

Fairness

Performance across diverse groups

Bias

Analysis of decision patterns for skew

100
90
80
70

Score

ARTIFICIAL INTELLIGENCE

methodologies, having tested over 80 models against a combination of 73 scenarios and 65 metrics.

60
50
40
30
20
10

Toxicity

Detection rate of harmful content

Efficiency

Resource usage during task execution

0
USABO*

Uniform Bar

Semifinal 2020

Exam

SAT

Advanced

WinoGrandeSommelier(commonsense)*USA Biology Olympiad, a prestigious national competition testing high school students in biology. Sources: ARK Investment Management LLC, 2024, based on data from Life Architect 2023 and Bomasani et al. 2023 as ofJan. 9, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.
Past performance is not indicative of future results.

31Will LLMs Run Out Of Data, Limiting Their Performance?
Computing power and high-quality training data appear to be the primary contributors to model performance. As models growand require more training data, will a lack of fresh data cause model performance to plateau? Epoch AI estimates that highquality language/data sources like books and scientific papers could be exhausted by 2024, though a larger set of untapped vision

Language Token Stock

30
25
20
15

~40 Quadrillion Tokens

Leading LLM Training Set vs.

Tokens (Trillions)

ARTIFICIAL INTELLIGENCE

data still exists.

Untapped Data Sources•

30 quadrillion words spoken
annually•

Speech-to-text tools that
capture the estimated 80+
trillion words spoken daily.

•

Synthetic data that augments
primary data.

•

Autonomous taxis, trucks,
drones, and other robots thatgenerate large volumes ofphysical world data.

10
5
0
GPT-3
GPT-3Tokens
Training
Training Tokens

Llama 2Llama
2Training
TokensTraining Tokens

GPT-4
GPT-4
Training
TokensTraining Tokens

Tokens Posted On X
Spoken Language
Language Tokens
TokensPostedOn X Spoken Tokens
AnnualEstimate
Annual Estimate
Annual Estimate
Annual Estimate

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of data sources as of Jan 9, 2024, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

32

Customized AI Offerings Should Enjoy More Pricing PowerAs open-source alternatives emerge and costs decline, software vendors tailoring AI to end-use applications should be able tomonetize them more readily. Conversely, simple generative AI applications are likely to commoditize rapidly.
Take-Rate Of Notable Enterprise Software Solutions% of Value Captured

ARTIFICIAL INTELLIGENCE

25%
20%
15%
10%
5%
0%
Business Email

Email Marketing

Low Value Capture• Horizontal, Commoditized Tools• < 5% Value Captured• Example: AI Meeting Summaries

IT Service Management

CRM

IT Incident

Smart Transportation

Cloud-Based Security

Response

Analytics

Platforms

High Value Capture• Verticalized, Highly Differentiated Tools• 20%+ Value Captured• Example: Autonomous Ride-hailSources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of data sources, including Sirohi 2023 and McKinsey & Co. 2023 as of Jan. 9, 2024, which are available upon request. Forecasts are
inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is notindicative of future results.

33

Accelerating The Growth Of Knowledge Worker Productivity Represents A
Potential Multi-Trillion Dollar Opportunity
Artificial intelligence has the potential to automate most tasks in knowledge-based professions by 2030, dramatically increasing
the average worker's productivity. Software solutions that automate and accelerate knowledge work tasks should be prime

AI Total Addressable Market (TAM) Forecast In 2030

Impact of AI on Software Growth

Software Vendor Value Capture % Of Productivity Gain

2.5x Uplift

4.5x Uplift

6.5x Uplift
54%
CAGR

$20

1%

10%

20%

$18
$16

2.5

4.5

$0.7T

$1.3T

$7T

$13T

$14T

$26T

$12
$10

$1.9T

$19T

$37T

34%
CAGR

$8
$6
$4

6.5

46%
CAGR

$14

$ Trillions

Productivity Uplift (Multiple)

ARTIFICIAL INTELLIGENCE

beneficiaries.

$2$-

16% Annual Growth Rate

2016

2023

2030 Forecast

CAGR = Compound Annual Growth Rate. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of data sources, including McKinsey & Co. 2023, which are available upon request. Forecasts
are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is
not indicative of future results.

BIG IDEAS 2024

34

Research By:

Yassine Elmandjra

David Puell

Director of Digital Assets

Research Associate

Bitcoin
Allocation
Growing The Role Of Bitcoin
In Investment Portfolios
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

35
Important Information
Bitcoin is a relatively new asset class, and the market for bitcoin is subject to rapid changes and uncertainty. Bitcoin is largely unregulated and bitcoin investments may be more susceptible to fraud
and manipulation than more regulated investments. Bitcoin is subject to unique and substantial risks, including significant price volatility and lack of liquidity, and theft.
Bitcoin is subject to rapid price swings, including as a result of actions and statements by influencers and the media, changes in the supply of and demand for bitcoin, and other factors. There is no
assurance that bitcoin will maintain its value over the long term.

BITCOIN ALLOCATION

The information provided on the following slides is based on ARK’s research and is not intended to be investment advice. ARK researches the utility of bitcoin as an investment in order to determine
its potential future value as presented on the following slides. This material does not constitute, either explicitly or implicitly, any provision of services or products by ARK, and investors should
determine for themselves whether a particular investment management service is suitable for their investment needs. ARK strongly encourages any investor considering an investment in bitcoin or any
other digital asset to consult with a financial professional before investing. All statements made regarding bitcoin are strictly beliefs and points of view held by ARK and are not recommendations by
ARK to buy, sell or hold bitcoin. Historical results are not indications of future results.

Important Terms and Concepts
The research presented on the following slides contains some terms and concepts that may not be familiar to some readers, so below we provide explanations to help provide a basis for evaluating
the research.

•

Sharpe Ratio is a well-known and well-reputed measure of risk-adjusted return on an investment or portfolio, which indicates how well an investment performs in comparison to the rate of returnon a risk-free investment such as U.S. government treasury bonds or bills. Sharpe ratio is calculated by first calculating the expected return on an investment portfolio or individual investment
and then subtracting the risk-free rate of return. Normally, a higher Sharpe Ratio indicates good investment performance, given the risk, while a Sharpe Ratio less than 1 is considered less than
good. Sharpe ratio is used in our research to determine, hypothetically, at what allocation percentage bitcoin would maximize the risk-adjusted return of an overall portfolio consisting of othercommonly used asset classes.

•

Efficient Frontier is the set of optimal portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return. In other words, itgraphically represents portfolios that maximize returns for the risk assumed. Portfolios that lie below the efficient frontier are considered sub-optimal because they do not provide enoughreturn for the level of risk, and portfolios that cluster to the right of the efficient frontier are also considered sub-optimal because they have a higher level of risk for the defined rate of return.
The Efficient Frontier chart is used in this section to illustrate that the simulated portfolio we constructed with an allocation to bitcoin lies along the efficient frontier as compared to theportfolios consisting of single asset classes which would be considered sub-optimal.

•

Compound Annual Growth Rate (“CAGR”) is the average annual amount an investment grows over a period of years assuming profits are reinvested during the period. In other words, it breaks aninvestment's total return over a number of years into a single average rate. CAGR is typically used to compare assets or portfolios over a longer time period by using an average as opposed toanalyzing each year individually as returns from year to year may be uneven. We use CAGR in our research to determine the expected return of a portfolio or asset class over a period of years,
typically 5 years.

•

Standard Deviation is a measure of risk, or volatility, in a portfolio by indicating how much the investment will deviate from its expected return. An investment with higher volatility means ahigher standard deviation, and therefore more risk. We use standard deviation to determine the amount of return that would be commensurate with certain levels of risk.

Sources: ARK Investment Management LLC, 2024 Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

36

Digital Assets Like Bitcoin Are A New Asset Class
According to ARK’s research, bitcoin has emerged as an independent asset class worthy of a strategic allocation in institutional portfolios.

BITCOIN ALLOCATION

BitcoinCommodities(Including Gold)

Real Estate

Bonds

Equities(Including Emerging Markets)

History

Created during the Global Financial
Crisis in 2009 by an individual orgroup under the pseudonym Satoshi
Nakamoto

Origins trace back thousands ofyears to commodities like gold
being used as a store of value

Earliest known private
property rights took
shape in ancient
Greece and Rome

Earliest known bond was issued
by the city of Venice in the 12th
century, but the concept of
debt/lending can be traced backto ancient Mesopotamia

Origins trace back to the 1600s
with the establishment of the
Amsterdam Stock Exchange

Investability

Highly liquid and accessible toanyone with access to the internet.
Traded on crypto exchanges andthrough spot ETFs

Fairly liquid and accessible throughphysical coins and ETFs throughbanks and brokers.

Illiquid, purchased
directly or through
REITs

Highly liquid. Traded on bondmarkets, accessible throughbrokers

Highly liquid. Traded on stock
exchanges, accessible throughbrokers

Basis Of Value

Tied to demand for a decentralized,
independent monetary system
powered by open-source software

Tied to supply and demand,
influenced by global economic
conditions

Tied to interest rates,
property markets, andlocal economic factors

Tied to interest rate policies andcredit risk

Tied to expectations of future
cash flow

Correlation
Of Returns

Low correlation with traditional
asset classes

Typically inversely correlated withasset classes, especially during
economic uncertainty

Typically low tomoderate correlation
with stocks and bonds

Inversely correlated recently, but
not always throughout economic
history, with equities

Correlated with the health ofglobal economy and market
sentiment

Governance

Decentralized and communitydriven, leveraging open-source
software for decision making

Governed by mining regulation

Governed by local andnational property laws

Governed by issuance terms set
by government or corporations

Governed by company
management and regulated bygovernment agencies

Use Cases

Scarce digital store of value, its
currency native to the internet

Industrial activity, wealthpreservation, and hedging

Personal residence,
rental income

Fixed income investment, withregular interest payments andreturn of principal at maturity

Company ownership, often withvoting rights and dividends

Sources: ARK Investment Management LLC, 2024 For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past
performance is not indicative of future results.

37

Bitcoin Has Outperformed Every Major Asset Over Longer Time Horizons
During the last seven years, bitcoin’s annualized return has averaged ~44%, while that of other major assets has averaged 5.7%.
Annualized Returns Across Major Asset Classes*
BitcoinGold

Commodities

Real Estate

Bonds

Equities

Emerging Markets

80%

60%
50%
CAGR (%)

BITCOIN ALLOCATION

70%

Average Bitcoin CAGR: ~44%

40%
30%

Average Asset Class CAGR: 5.7%

20%
10%
0%
-10%
Last 7 Years

Last 6 Years **Last 5 Years

Last 4 Years

Last 3 Years ***Asset classes are represented by the following instruments: SPDR S&P 500 ETF Trust (SPY, equities), Vanguard Total Bond Market Index Fund Investor Shares (VBMFX, bonds), Vanguard Real Estate Market Index Fund Investor Shares(VGSIX, real estate), SPDR Gold Trust (GLD, gold), iShares S&P GSCI Commodity-Indexed Trust ETF (GSG, commodities), and Vanguard Emerging Markets Stock Index Fund Investor Shares (VEIEX, emerging markets). The performanceused to represent each asset class reflects the net asset value (NAV) performance of each ETF/fund for the time periods shown. **“Last 6 Years” includes 2018, 2021, and 2022; “Last 3 Years” includes 2021 and 2022, all years of market
downturn or relatively low returns for bitcoin. Sources: ARK Investment Management LLC, 2024, based on data and calculation from PortfolioVisualizer.com, with bitcoin price data from Glassnode, as of December 31, 2023. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

38

Generally, Bitcoin Investors With A Long-Term Time Horizon Have Benefited
Over Time
Bitcoin Realized Returns
Days Held“Time, Not Timing”*

500

3,000

3,500

4,000

4,500

2014

term investment horizon has been key to investing
Date of Investment

BITCOIN ALLOCATION

2,500

2013

depreciation can occur over the short term, a long-

long?”

2,000

2012

returns. While significant appreciation orInstead of “when,” the better question is “for how

1,500

2011

Bitcoin’s volatility can obfuscate its long-termin bitcoin.

1,000

2015
2016
2017
2018
2019

Historically, investors who bought and held bitcoin

2020

for at least 5 years have profited, no matter when2021

they made their purchases.

2022
2023

*Adage first put forth in this configuration by Mizuho Financial Group. Sources: ARK Investment Management LLC, 2024, based on data from Glassnode as of December 31, 2023. For informational purposes only and should
not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

39

Bitcoin's Correlation To Traditional Assets Is Low
Historically, bitcoin’s price movements have not correlated highly to those of other asset classes. During the past five years, thecorrelation of bitcoin’s returns relative to traditional asset classes has averaged only 0.27.
Asset Class Correlation Matrix1,2(12-Month As Of December 2023)

BITCOIN ALLOCATIONHigh correlation: coefficient value lies between ± 0.66 and ±1
Moderate correlation: coefficient value lies between ± 0..4 and ± 0.66
Low correlation: coefficient value lies below ± 0.4
Bitcoin
BitcoinGold

Commodities

Real Estate

Bonds

Equities

Emerging Markets

0.2

0.1

0.4

0.26

0.41

0.23

-0.03

0.28

0.46

0.26

0.34

0.42

-0.12

0.43

0.5

0.57

0.86

0.68

0.48

0.46

Gold

0.2

Commodities

0.1

-0.03

Real Estate

0.4

0.28

0.42

Bonds

0.26

0.46

-0.12

0.57

Equities

0.41

0.26

0.43

0.86

0.48

Emerging Markets

0.23

0.34

0.5

0.68

0.46

0.73

AVERAGE

0.27

0.25

0.21

0.53

0.35

0.53

0.73

0.49

[1] A correlation of 1 connotes that assets perfectly move in tandem; 0 means their movement is completely independent from each other; -1 suggests that they move in perfectly opposite directions. [2] Asset classes are
represented by the following instruments: SPDR S&P 500 ETF Trust (SPY, equities), Vanguard Total Bond Market Index Fund Investor Shares (VBMFX, bonds), Vanguard Real Estate Market Index Fund Investor Shares (VGSIX, realestate), SPDR Gold Trust (GLD, gold), iShares S&P GSCI Commodity-Indexed Trust ETF (GSG, commodities), and Vanguard Emerging Markets Stock Index Fund Investor Shares (VEIEX, emerging markets). The performance used torepresent each asset class reflects the net asset value (NAV) performance of each ETF/fund for the time periods shown. Sources: ARK Investment Management LLC, 2024, based on data and calculation from
PortfolioVisualizer.com, with bitcoin price data from Glassnode, as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular
security or cryptocurrency. Past performance is not indicative of future results.

40

Bitcoin Could Play An Important Role In Maximizing Risk-Adjusted Returns
Focused on the volatility and return profiles of traditional asset classes, ARK’s research suggests that a portfolio seeking tomaximize risk-adjusted returns1 would have allocated 19.4% to bitcoin in 2023.
Simulated Optimal Portfolio Allocation Targets By Year2,32023 Simulated Portfolio Optimization3,4,5(Rolling 5-Year As Of End Of Every Year6)
Gold

Commodities

Bonds

Equities

2015

0.5%

0%

0%

82.5%

16.9%

2016

0.9%

0%

0%

62.1%

36.9%

2017

0.9%

0%

0%

58.7%

40.3%

2018

2.4%

0%

0%

77.3%

20.2%

2019

3.9%

1.4%

0%

70.4%

24.2%

2020

4.3%

4.1%

0%

75.6%

15.8%

2021

4.7%

7.3%

0%

65.3%

22.6%

2022

6.2%

52.8%

9.1%

0%

31.8%

2023

19.4%

40.7%

9.6%

0%

30.3%

High

Expected Return

BITCOIN ALLOCATION

Bitcoin

Based On Monthly Asset Class Returns (No Limit, Rolling 5-Year6)
Commodities
9.6%

Bitcoin
19.4%

2023
Tangency
Portfolio

Gold
40.7%

Bitcoin

Equities
30.2%

Equities
Commodities
Real Estate
Emerging Markets

Gold
Bonds

High

Low
Standard Deviation[1] Measurement of returns of an asset against its risk (in this case, volatility). [2] Real Estate and Emerging Markets are calculated out of these tangency portfolios given their low participation in maximizing risk-adjusted returns
relative to the other asset classes included in this table. [3] Asset classes are represented by the following instruments: SPDR S&P 500 ETF Trust (SPY, equities), Vanguard Total Bond Market Index Fund Investor Shares (VBMFX,
bonds), Vanguard Real Estate Market Index Fund Investor Shares (VGSIX, real estate), SPDR Gold Trust (GLD, gold), iShares S&P GSCI Commodity-Indexed Trust ETF (GSG, commodities), and Vanguard Emerging Markets Stock Index
Fund Investor Shares (VEIEX, emerging markets). The performance used to represent each asset class reflects the net asset value (NAV) performance of each ETF/fund for the time periods shown. [4] This simulation, also known as“efficient frontier”, is a set of theoretical investment portfolios expected to provide the highest returns at multiple levels of risk. [5] The dots under the efficient frontier in the chart represent portfolios comprised of a single asset
class. [6] 5 years were used since, in our view, they represent a sample of a long-term time horizon. Sources: ARK Investment Management LLC, 2024, based on data and calculation from PortfolioVisualizer.com, with bitcoin pricedata from Glassnode, as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past
performance is not indicative of future results.

41

On A 5-Year Rolling Basis, An Allocation To Bitcoin Would Have Maximized
Risk-Adjusted Returns During The Past 9 Years
According to our analysis, in 2015, the optimal allocation to maximize risk-adjusted returns1—on a 5-year time horizon3—would
have been 0.5%. Since then, on the same basis, the average allocation to bitcoin would have been 4.8%, and in 2023 alone, 19.4%.
Allocation Into Bitcoin By Year To Maximize Risk-adjusted Returns2

BITCOIN ALLOCATION(Maximization By Sharpe Ratio, Rolling 5-Year Time Horizon3,4)
25%
19.4%

20%

15%

10%

5%

Optimal Allocation: 4.8% On Average
0.5%

0.9%

0.9%

2015

2016

2017

2.4%

3.9%

4.3%

4.7%

2019

2020

2021

6.2%

0%
2018

2022

2023

[1] Risk-adjusted returns given by the Sharpe ratio, which divides expected returns minus the risk-free rate by the standard deviation of the asset. [2] For asset class representation in this calculation, please refer to the previous
slide. [3] 5 years were used since, in our view, they represent a sample of a long-term time horizon.. Sources: ARK Investment Management LLC, 2024, based on data and calculation from PortfolioVisualizer.com, with bitcoin pricedata from Glassnode, as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past
performance is not indicative of future results.

42

What Would Be The Impact Of An Optimal Allocation Into Bitcoin?
Allocations from the $250 trillion global investable asset base into bitcoin would have a significant impact on the price.
Hypothetical Impact of Institutional Investment On The Price Of Bitcoin1,2~$2,300,000$2,000,000
Price Potential (USD)

BITCOIN ALLOCATION$2,500,000$1,500,000$1,000,000~$550,000$500,000~$120,000$01% Allocation

4.8% Average Allocation

19.4% Allocation(Average Maximum Sharpe Ratio 2015-2023,(Maximum Sharpe Ratio 2023,

Rolling 5-Year Time Horizon)

Rolling 5-Year Time Horizon)[1] This chart was calculated by dividing each percentage allocation of the estimated global investable asset base of $250 trillion USD (Chung 2021) by the fully diluted expected bitcoin supply of 21 million. When dividing theinvestable asset base by the bitcoin supply of 19.5 million as of 12/31/2023, the price potential increases to ~$127k (1% allocation), ~$615k (4.8% allocation), and ~$2.5 million (19.4% allocation). [2] Asset classes are represented by thefollowing instruments: SPDR S&P 500 ETF Trust (SPY, equities) and Vanguard Total Bond Market Index Fund Investor Shares (VBMFX, bonds). The performance used to represent each asset class reflects the net asset value (NAV)
performance of each ETF/fund for the time periods shown. Sources: ARK Investment Management LLC, 2024, based on data and calculation from PortfolioVisualizer.com, with bitcoin price data from Glassnode, as of December 31,
2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

BIG IDEAS 2024

43

Research By:

Yassine Elmandjra

David Puell

Director of Digital Assets

Research Associate

Bitcoin
In 2023
Demonstrating Resilience And
Recovery After Challenges In 2022
Sources: ARK Investment Management LLC, 2024. Information as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

44

In 2023, Bitcoin’s Price Surged 155%, Increasing Its Market Cap To $827
BillionBitcoin Price, 2023

$45,000

BITCOIN IN 2023

$40,000

ARK, 21Shares
File For Bitcoin
ETF$35,000$30,000

Court Rules SEC
Must Review
Grayscale’s
Bitcoin ETF Bid

SEC Charges Coinbase
For Operating As An
Unregistered Securities
Exchange

Sam BankmanFried Found Guilty
Of Seven Counts

PayPal Launches
USD Stablecoin

Silicon Valley BankAnd Signature Bank
Collapse

Binance CEO CZ
Steps Down And
Pleads Guilty In
Settlement With
DOJ

Genesis
Files For
Bankruptcy
Ripple Labs
NotchesLandmark Win In
SEC Case$25,000$20,000
Coinbase
Unveils Base
Protocol

Bitcoin Transactions
Reach Record HighAs Ordinals SurgeEl Salvador
Launches First
Government
Backed Bitcoin
Mining Pool

BlackRock Files
For Bitcoin ETF$15,000
Jan-23

Feb-23Mar-23Apr-23May-23Jun-23

Jul-23Aug-23

Sep-23Oct-23

Nov-23

Dec-23

Sources: ARK Investment Management LLC, 2024, based on data from Glassnode as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell,or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

45

Bitcoin’s Price Crossed Above Its On-Chain Market Mean For The First TimeIn ~4 Years
An original ARK metric, the on-chain market mean has been a reliable demarcation point between risk-on and risk-off bitcoin
markets. Historically, when the price of bitcoin crosses above the market mean, it typically indicates the early stages of a bull
market.
Bitcoin’s Break Above Its True Market Mean Signals The Onset Of A Bull Market
On-Chain Market Mean Ratio (AVIV)

Risk-on/Risk-off Threshold

100000

100

10000
1000

10

100
10
1

1
0.1
0.01
Jan-11

0.1
Jan-12

Jan-13Jan-14Jan-15Jan-16

Jan-17Jan-18Jan-19Jan-20Jan-21

Jan-22

Jan-23

Sources: ARK Investment Management LLC, 2024, based on data from Glassnode as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell,or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

Threshold

On-Chain Market Mean

On-Chain Market Mean Ratio (AVIV) And

Price And On-Chain Market Mean (USD)

BITCOIN IN 2023

BTC PriceBITCOIN IN 2023

46

2023 Provided Important Answers To The Crises In 2022
Entity2022 Crisis2023 Resolution

Luna, UST

Algorithmic stablecoin UST collapsed, causing a significant sell-off in
its sister cryptocurrency, LUNA, erasing over 60 billion USD in market
value.*

Founder Do Kwon was arrested and faces eight indictments in Manhattan’s
U.S. District Court, while his startup, Terraform Labs, faces SEC civil charges
for orchestrating a multi-billion-dollar securities fraud.

Three Arrows
Capital

LUNA’s collapse led high profile hedge fund Three Arrows Capital(3AC) into a liquidity crisis, forcing it into bankruptcy.

The Monetary Authority of Singapore banned 3AC’s co-founders from capital
markets activity for nine years, and a court in the British Virgin Islands froze
their assets.

Celsius
Network

Crypto lending platform Celsius froze withdrawals and then filed forbankruptcy.

A bankruptcy court approved a restructuring plan for Celsius that will returnassets to customers and establish a new company focused on mining andstaking. CEO Alex Mashinsky faces criminal charges for allegedly misleading
customers.

FTX

After Coindesk exposed the fraudulent financial entanglement
between trading firm Alameda and FTX, FTX suffered a bank run andcollapsed.

The Southern District of New York convicted Sam Bankman-Fried on sevencounts of fraud related to the collapse of FTX. A bankruptcy court granted
the FTX estate approval to sell its assets.

BlockFi

BlockFi’s exposure to FTX forced it into bankruptcy.

BlockFi received court approval to liquidate, with partial in-kind repayment
to creditors.

GenesisWith significant loans to 3AC, crypto lender Genesis declaredbankruptcy.

Crypto lender Genesis reached a settlement with parent company DCG,
involving $620 million in repayments. The SEC is suing Genesis for selling
unregistered securities.

*This data point is sourced from Corva 2022. Sources: ARK Investment Management LLC, 2024. Information as of December 31, 2023. For informational purposes only and should not be considered investment advice or arecommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

47

Bitcoin Was A Safe Haven During The Regional Banking Collapse
In early 2023, during the historic collapse of US regional banks, bitcoin’s price appreciated more than 40%, highlighting its role asa hedge against counterparty risk.
As Regional Banks Collapsed, Bitcoin’s Price Appreciated ~40%
KBW Regional Banking Index

45,000Silicon Valley,
Signature, Silvergate,
and First Republic
Bank collapsed
during the regionalbanking crisis

40,000100

35,00090

30,00080

25,00070

20,00060

Bitcoin Price (USD)110KBW Regional Banking Index

BITCOIN IN 2023

120

Bitcoin Price (USD)

15,000
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Sources: ARK Investment Management LLC, 2024, based on data from Bloomberg and Glassnode as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation
to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

48

The Surge In Inscriptions Signaled A Role For The Bitcoin Network Beyond
Transaction Settlement
Bitcoin Inscriptions3

Launched in January 2023, Bitcoin Inscriptions

Audio, Image, Video, Other

introduced a unique numbering system for each

Text/BRC-20

60

satoshi, the smallest unit of bitcoin, based on its
position in the blockchain. Each satoshi isinscribe their data, images, or text.
Unlike other blockchains that require smart
contracts for NFTs1, Bitcoin Inscriptions are on thebase layer of the Bitcoin blockchain.
Ordinals2 have sparked debate about the impact ofInscriptions on transaction sizes and block space. In
our view, Ordinals are a product of the free market
and represent healthy innovation on Bitcoin.

50
Cumulative Inscriptions (Millions)

BITCOIN IN 2023

identifiable and immutable, allowing users to

40

30

20

10

0
Jan-23Apr-23

Jul-23Oct-23[1] Short for Non-Fungible Token, it is tokenized metadata via unique identification codes recorded on a blockchain. [2] Refers to the creation of non-fungible tokens (NFTs) in the Bitcoin network by making Inscriptions, where
metadata such as images or videos are attached to individual satoshis (the smallest unit of account). [3] BRC-20: A token standard that enables the minting and transaction of fungible tokens via the Ordinals protocol on the
Bitcoin network. Sources: ARK Investment Management LLC, 2024, based on data from Glassnode as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation
to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

49

Bitcoin’s Fundamentals Didn’t Skip A Beat During The Crisis in 2022 And
Continued Apace In 2023
Bitcoin Network Stats

2022

Bitcoin’s Hash Rate2, A Proxy for Network Security,
Hit An All-Time High In 2023

2023
600

Price

$16,553$42,225

Market Cost Basis1($ Billions)1$380.7$427.7
Exahashes/s

BITCOIN IN 2023

500

400

Hash Rate2
3(EH/s , 14-Day Average)

254.3

523.2

Supply Of BTC Last
Moved >1 Year Ago (%)

66.5%

70.2%

BTC Addresses With
Non-Zero Balance3 (Millions)

43.3

51.7

200

Long-Term Holder Supply 4(BTC, Millions)

14.1

14.8

100

Transaction Count5(Non-Inscriptions Related, Thousands)

256.2

367.5

300

0
Apr 22

Jul 22

Oct 22

Jan 23

Apr 23

Jul 23

Oct 23[1] The on-chain volume-weighted average price of the market, calculated by aggregating the value of all bitcoins in circulation at the time when they last moved. Also known as realized price or realized cap. [2] The estimatedcomputational power mining within and providing security to the Bitcoin network. [3] Number of addresses in the Bitcoin network with a balance larger that zero. [4] Bitcoin supply last moved 155 days ago or more, the thresholdat which the possibility of a bitcoin remaining unmoved increases drastically. [5] Number of transactions between two addresses of the Bitcoin network. Sources: ARK Investment Management LLC, 2024, based on data from
Glassnode as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is notindicative of future results.

50

CME* Surpassed Binance As The World’s Largest Bitcoin Futures Exchange
As the demand for more regulated and secure infrastructure increased following the contagion in 2022, bitcoin’s market dynamics
shifted more to the US.
Bitcoin Futures Open Interest Hit a Record $4.5 Billion on the CME
CME

CME’s open interest
surpassed Binance’s
for the first time.

FTX

After outpacing the CME, FTX’s
market share of open interest
collapsed in late 2022.

$4$ Billions

BITCOIN IN 2023

$5

Binance

$3

$2

$1

$0
Sep 22

Oct 22

Nov 22

Dec 22

Jan 23

Feb 23

Mar 23

Apr 23

May 23

Jun 23

Jul 23

Aug 23

Sep 23

Oct 23

Nov 23

Dec 23*Short for Chicago Mercantile Exchange. Sources: ARK Investment Management LLC, 2024, based on data from Glassnode as of December 31, 2023. For informational purposes only and should not be considered investment
advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

51

Bitcoin Is Evolving Into A Reliable Risk-Off Asset
With increasing macroeconomic uncertainty and less trust in traditional ”flights to safety,” bitcoin has become a viable alternative.

Evaluating Bitcoin As A Risk-Off Asset

BITCOIN IN 2023

Safety & CapitalPreservation
Bitcoin operates on adecentralized
network,
independent of any
single entity,
government, or
central bank. Its
distributed, opensource nature
protects it against
arbitrary asset
seizure andcounterparty risk.

Diversification

Bitcoin's historically
low correlation withtraditional asset
classes is increasing
its role as a source ofdiversification.
Adding a noncorrelated asset toportfolios potentially
increases returns perunit of risk andprovides a buffer
against market
downturns.

Long-Term
Investment Horizon

Liquidity &Accessibility

Inflation
Hedge

Despite its shortterm volatility,
bitcoin has delivered
significant long-term
price appreciation. By
design, scarcity
increases theprobability of capitalpreservation.

Global investors canaccess and trade
bitcoin 24/7, which isincreasingly
important in times ofrisk-off uncertainty.

Bitcoin’s supply will
be capped at 21
million coins. As withgold, scarcity
characterizes
bitcoin’s role as asafe-haven asset.

Sources: ARK Investment Management LLC, 2024. Information as of December 31, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security or cryptocurrency. Past performance is not indicative of future results.

52

Major Catalysts Await Bitcoin In 2024
Bitcoin Halving

Institutional Acceptance

Regulatory Developments

On January 11, 2024, the launch of spot

The Bitcoin halving occurs

Thanks to its continued resilience and

The bankruptcies of FTX and Celsius

bitcoin ETFs set the stage for Bitcoin’s

approximately every 4 years, cutting

performance, the shift in perception

have advanced the push for more

growth, by offering investors a more

the reward for mining new bitcoinof bitcoin—from a speculativetransparent and open global crypto

direct, regulated, and liquid way toblocks in half. Historically, each

instrument to a strategic investment

regulation, including the potential

gain exposure. Bitcoin spot ETFs arehalving event has coincided with thein a diversified portfolio—should

passage of a US bill establishing a

traded on major stock exchanges,

beginnings of a bull market. Expectedcharacterize its evolution in 2024.

regulatory framework forallowing investors to buy and sellin April 2024, this halving will reduce

Exemplifying this evolution, Larry

cryptocurrencies, and theshares through their existing

bitcoin’s inflation rate from ~1.8% toFink, CEO of BlackRock, has shifted

implementation of Europe's Markets

brokerage accounts, and should~0.9%.

his stance from bitcoin skepticism toin Crypto-Assets (MiCA) regulation,

its potential as a "flight to quality."

which mandates licensing for crypto

reduce the learning curve andBitcoin’s Circulating Supply

operational complexities associatedwith direct investments in bitcoin.

Units Of Bitcoin (Million)

BITCOIN IN 2023

Bitcoin Spot ETF Launch

wallet providers and exchanges in theEU.

20
BTC Supply (units)

10

BTC Supply Cap
Expected Bi tcoin
Issuanc e

0
2009

2015

2021

2027

Sources: ARK Investment Management LLC, 2024, based on data from Glassnode as of December 31, 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be
considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

BIG IDEAS 2024

53

Research By:

Frank Downing
Director of Research,
Next Generation Internet

Smart
Contracts
Powering The Internet-Native
Financial System
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

54

Deployed on public blockchains, smart contracts offer a global, automated, andauditable alternative to rent-seeking intermediaries and legacy financial
infrastructure.

SMART CONTRACTS

In the aftermath of the “crypto crisis” in 2022, several digital asset solutions gained
traction, including stablecoins, tokenized treasury funds, and scaling technologies.
According to ARK’s research, as the value of on-chain financial assets increases,
the market value associated with decentralized applications could scale 32% at anannual rate, from $775 billion in 2023 to $5.2 trillion in 2030.

Public blockchains are digital asset ledgers openly available for participants to access and are not controlled by a single entity. Smart Contracts are programs that exist on a blockchain and execute computer code when
specific conditions are met. Sources for stablecoin usage, treasury issuance, and core development are provided in the corresponding slides that follow. Sources: ARK Investment Management LLC, 2024, based on a range ofexternal sources, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation tobuy, sell, or hold any particular security. Past performance is not indicative of future results.

55

Smart Contracts Are The Foundation Of The Internet Financial System
In their infancy, smart contracts are powering a novel financial system that is native to the internet. Ignited by Ethereum,
the largest smart contract blockchain, multiple networks are supporting on-chain activity and vying for market share.

SMART CONTRACTS

Smart Contract
Network

Market Value
2023e

Price Performance2023

Ethereum$274 billion+90%

BNB Chain$

49 billion+28%

Solana$44 billion+924%

Avalanche$

14 billion

+254%

Tron

$

9 billion+120%

Polygon PoS$

9 billion+28%

Transaction Fees
Top 6 Smart Contract Networks, 2023
EthereumTron

BNB Chain

Avalanche

SolanaPolygon PoS$3.7
Billion

NOTE: Networks represented are smart contract Layer 1 blockchains with >$10 million in 2023 transaction fees. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data fromexternal sources, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation tobuy, sell, or hold any particular security. Past performance is not indicative of future results.

56

Stablecoins Highlight The Value Proposition Of Smart Contracts
Given hyperinflation in emerging markets and an increase in global instability, the demand for stablecoins offering digital accessto the US dollar is soaring. During the past three years, the number of daily active stablecoin addresses globally has increased at
an annual rate of 93%, from 171 thousand to 1.2 million. In 2023, stablecoin transfer volumes surpassed those of Mastercard.
Total Transfer Volume, 2023
(Trillions)

Tron
Avalanche C-Chain
ETH L2s

BNB Chain
Polygon PoS

Ethereum
Solana

$16

$15

$14

1,400,000$12

1,200,000

$10
$10

USD

1,000,000
800,000$6

400,000$4

200,000

$2

Ju
l-2
3
O
ct
-2
3

Ja
n23
Ap
r23

Ju
l-2
2
O
ct
-2
2

22

Ap
r-

Ju
l-2
1
O
ct
-2
1
Ja
n22

-

$9

$8

600,000

Ja
n21
Ap
r21

SMART CONTRACTS

Stablecoin Daily Active Addresses$2$0PaypalMastercard

Stablecoins

NOTE: Stablecoin Daily Active Addresses are averaged for each month displayed in chart. Transfer volume estimates are used where Q4 2023 data is not yet available at time of publication. Sources: ARK Investment
Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational
purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

Visa

57

Traditional Financial Assets Are Moving On-Chain
Tokenization allows treasurers to track, trade, and collateralize funds more easily on public blockchains than in traditional
financial markets. In 2023, tokenized treasury funds jumped more than 7-fold to $850 million. Early funds launched on the Stellar
blockchain, but Ethereum became the largest market for tokenized treasuries in 2023.
Value Of Tokenized Treasury Funds
Ethereum

Polygon

Solana

$900
$800
$700
$600
Millions

SMART CONTRACTS

Stellar

$500
$400
$300
$200
$100
$1-Jan-23

1-Feb-23

1-Mar-23

1-Apr-23

1-May-23

1-Jun-23

1-Jul-23

1-Aug-23

1-Sep-23

1-Oct-23

1-Nov-23

1-Dec-23

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which are available upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

1-Jan-24

58

Developers Refined Protocols During The Bear Market
In the face of crises and their aftermath in 2022, core developers advanced technical roadmaps and hardened protocols to
support the next bull market. Ethereum moved successfully to Proof-of-Stake (PoS)* consensus, and Solana hit a new record forcontinuous uptime.
Solana Network Uptime

Staked Ether350

30

Block propogation
bug

300

25

250

20
PoS Merge

15
105Transaction spamTransaction spamWithdrawals Enabled

Number Of Days

Deduplication

Failed validator
upgrade

200

Node

error

misconfiguration
Softwarebug

150
Launch

100
50

-2
0

Ju
n23
Se
p23
De
c23

Ju
n21
Se
p21
De
c21
M
ar
-2
2
Ju
n22
Se
p22
De
c22
M
ar
-2
3

De
c20
M
ar
-2
1

Ju
n20
Se
p20
De
c20
M
ar
-2
1
Ju
n21
Se
p21
De
c21
M
ar
-2
2
Ju
n22
Se
p22
De
c22
M
ar
-2
3
Ju
n23
Se
p23
De
c23

0

-

M
ar

Number Of Ether (Millions)

SMART CONTRACTS

35*Proof-of-Stake is a method of securing public blockchains, in which network participants who wish to validate transactions on the network pledge or “stake” their assets at risk of loss if they fail to operate within the
network’s rules. Chart data end 12/31/23. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which are available upon request. Forecasts are
inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is notindicative of future results.

59

Layer 2 Networks Have Scaled Transactions In The Ethereum Ecosystem
Since early 2021, more than 20 Layer 2 (L2)* networks have launched, enabling Ethereum to scale average daily transactions atlower fees by 4x. Despite their early success, most L2 networks are controlled centrally. The proliferation of L2s has complicateduser and developer experiences.
Average Daily Transactions
Ethereum Mainnet

Layer 2 Neworks

Qtr4

Qtr3

Transaction Count (Millions)

SMART CONTRACTS

5
4
3
2
1
0
Qtr1
2019

Qtr2

Qtr3

Qtr4

Qtr1
2020

Qtr2

Qtr3

Qtr1
2021

Qtr2

Qtr4

Qtr1
2022

Qtr2

Qtr3

Qtr4

Qtr1
2023

Qtr2

Qtr3

Qtr4

L2 networks aggregate transactions and settle the resulting state changes to a base-layer smart contract network like Ethereum, typically at higher throughput and lower cost compared to the base network. L2 transaction
count is based on data available on Artemis Dashboard: Arbitrum, Base, Linea, Optimism, Polygon zkEVM, Scroll, StarkNet, zkSync Era, Zora Network. Chart data end 12/31/23. Sources: ARK Investment Management LLC, 2024.
This ARK analysis is based on a range of underlying data from external sources, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should
not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.
*

60

Lower Costs Are Boosting On-Chain Engagement
As transaction costs have declined, on-chain engagement—as measured by the ratio of daily active addresses (DAUs) to monthly
active addresses (MAUs)—has increased.
Engagement Relative To Transaction Fees
DAU / MAU
$10.00

$6.28

10%
$1.00
8%

$0.28

$0.27
$0.13

$0.16

6%

$0.10

4%
$0.01

$0.003

2%

0%

$0.00
Ethereum

OptimismArbitrum

Base

SolanazkSyncNote: DAU / MAU traditionally refers to a measure of unique users. For this analysis, we are using a measure of unique addresses as an approximation for users. They are correlated but not equivalent. Sources: ARK
Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

Average Fee (2023)

DAU As A Percent Of MAU

SMART CONTRACTS

12%

61

Monolithic Chains Like Solana Offer An Alternative To Vertical Scaling
Smart contract network designs offer tradeoffs. By prioritizing base-layer decentralization, the Ethereum ecosystem became more
complex as it scaled. By prioritizing scalability in a single layer, Solana maintained a simple architecture for users and app
developers and has gained traction.

Horizontal Scaling

Vertical Scaling

SMART CONTRACTS

DAPP 1DAPP 2

L2
Arbitrum

DAPP 3

L2
Optimism

…
L2
Base

DAPP 1DAPP 2DAPP 3…

…

L1
Ethereum

L1
Solana+ Minimizes L1 validation cost

- Requires asset bridging between L1and L2, fragmenting liquidity+ Simplifies the environment fordevelopers and users- Raises L1 validation costs+ Supports multiple approaches for
scaling, encouraging flexibility &innovation- Increases complexity for developers
and users+ Maximizes composability andinteroperability- Potentially requires L2s to
maximally scale+ Leverages the network effect andliquidity advantages of Ethereum
mainnet- Introduces additional reliability andsecurity considerations across L2s+ Lowers fees and increases
throughput for base layertransactions- Requires apps depend L1 execution
environment

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which are available upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

62

Smart Contracts Could Collapse The Cost Of Financial Services
The value of financial assets globally ballooned from $140 trillion in 2000 to $510 trillion in 2020, thanks to a combination of
global economic growth, increased financialization, and expanding equity multiples. The operating cost of the global financial
system increased in tandem with the value of financial assets. At $20 trillion in total annual revenue, the aggregate financial
services industry’s take rate has been 3.3% relative to the value of all financial assets. Smart contracts could lower this drag on the

Value Of Global
Financial Assets

Global Financial
Services Revenue$510T

Trillions

SMART CONTRACTS

economy materially.

$17T

3.3% agg.
take rate

3.6x

3.3x

$5T

$140T

Economic Impact of Financial Regulatory Compliance

Activity

2020

2000

Cost Lowering
Solution

Know Your
Customer
Verification$1,500-$3,000+ per individual
verification

Unified digital identity
verifiable across institutions

Nasdaq Listing Fee$270k per listing + $52-$180k
annually

Direct DEX listing with global
distribution

Global Anti-Money
Laundering
Compliance2000

Cost To Current
System$274 billion cost to the global
financial system annually

Auditable provenance offunds on global ledger

2020

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which are available upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

63

Smart Contract Networks Could Generate Fees Of $450 Billion In 2030
Smart contracts could facilitate the origination, ownership, and management of on-chain assets for a fraction of traditional
financial costs. If financial assets were to migrate to blockchain infrastructure at a rate similar to the adoption of the internet,
and the take rates associated with decentralized financial services were a third those of traditional financial services, smart
contracts could generate annual fees of more than $450 billion and create more than $5 trillion in market value, increasing atcompound annual rates of 78% and 32%, respectively, through 2030.
Smart Contract Protocol Market Value

Actuals

1$6,000

Forecast$5,300$500$5,000

$450

$450
$400

78

$200

%

CA

R

$3,000

%

$250

G
CA

Trillions

Billions$300

GR$4,000$35037SMART CONTRACTS

Gross Smart Contract Fee Revenue$2,000

$150
$100
$50
$-

$1,000
$1

$20

$11

$8

2020

2021

2022

2023

$775

$2024

2025

2026

2027

2028

2029 2030

2023

2030
Estimate

2020-2021 data approximated using top 20 all-time fee generating protocols from Token Terminal Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from externalsources, which are available upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell,or hold any particular security. Past performance is not indicative of future results.
1

BIG IDEAS 2024

64

Research By:

Nicholas Grous

Andrew Kim

Associate Portfolio Manager

AnalystDigitalConsumers
Transitioning Toward
Digital LeisureSources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

65

According to ARK’s research, spending on digital leisure should take share from physicaloptions and grow 19% at an annual rate during the next seven years, from $7 trillion in
2023 to $23 trillion in 2030. Several trends are accelerating the shift to digital leisure:

DIGITAL CONSUMERS•

Connected TV (CTV) Advertising should grow 17% at a compound annual rate, from $25 billion in
2023 to $73 billion in 2030.

•

Social Commerce should grow 32% at an annual rate, from $730 billion today to over $5 trillion in
2030.

•

Sports Betting should remain turbocharged by the legalization of online/mobile betting.

•AI-assisted Video Game Creation is the new wave in gaming, building on user-generated
platforms like Roblox, which has hosted more than ~470 million experiences globally—52x the
combined number of PC, consoles, and mobile games.

•

AI-enabled Hardware could redefine personal wearable computing, especially if virtual reality(VR) continues to face challenges.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

66

Artificial Intelligence Could Lower The Average Workweek And Stimulate
Digital Consumption
During the 80 years between the Second Industrial Revolution through the end of World War II, labor hours per worker decreased
0.5% at an annual rate globally. Generative AI could lower labor hours per worker by 1.3% on average, from 5.0 hours per day in2022 to 4.5 hours in 2030.*

spent online from 40% in 2023 to 49% in 2030.
Global Labor Hours Per Worker Per Day*

Global Online And Offline Time**
Online

10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

Offline100%

2nd Industrial Revolution-0.5% per year

Generative AI Revolution-1.3% per year

1870

1910

1950

1990

2030
Forecast

Share Of Waking Hours

Daily Hours

DIGITAL CONSUMERS

As a result, consumers might devote more time to online entertainment, potentially increasing the share of total waking hours

80%
60%
40%
20%

31%

39%

49%

0%
2010

2020

2030
Forecast*To calculate global daily working hours, we divide total annual hours of labor per worker by the total days of the year. **The chart illustrating daily allocation of online vs. offline time captures total daily waking hours, including
those allocated to labor or education. The chart captures hours generated by internet users only. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources,
which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

67

Streaming TV Is Displacing Linear TV
In just two years, streaming’s share of overall TV consumption increased more than 10 percentage points to 39% as of July 2023,
surpassing the shares of cable and broadcast, respectively. Ad spend on connected TV (CTV) is following eyeballs and is likely togrow 17% in real terms at an annual rate, from $25 billion in 2023 to $73 billion in 2030. If so, ad spend on CTV should surpass thaton linear TV in 2027.
US TV Ad Spend**

Streaming

Cable

Connected TV

Broadcast

45%

Linear TV

$80

40%
35%

$60

30%

$ Billions

Share Of US TV Time

25%
20%
15%

$40

$20

10%
5%
Dec-23

Nov-23

Sep-23

Jul-23May-23Mar-23Jan-23

Nov-22

Sep-22

Jul-22

May-22Mar-22

Jan-22

Nov-21

Sep-21

Jul-21

0%
May-21

DIGITAL CONSUMERS

US TV Viewership Share*

$2018

'19

'20

'21

'22

'23E '24E'25E '26E '27E '28E '29E '30E

*The share of streaming, cable, and broadcast do not add up to 100%, as we exclude the portion of consumption that Nielsen categorizes as “Other,” which includes time spent on unmeasured sources like video-ondemand (VOD), audio streaming, gaming, and other device use. **We define linear TV as traditional TV delivered via cable, satellite, or over-the-air. We define connected TV as streamed TV delivered over-the-top throughsmart TVs, streaming media devices, video game consoles, and other modern hardware. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources,,
including Nielsen, Insider Intelligence, and MAGNA Global, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

68

Social Commerce Merchants Can Sell to Anyone—Anytime, Anywhere
Social media platforms are increasing their monetization of global audiences with e-commerce. Thanks to omnichannel
solutions—both physical and digital—social commerce could grow 32% at an annual rate, from $730 billion today to over
$5 trillion in 2030.

Instagram

YouTube

1.5B

2.8B MAUs*

Pinterest

Social Commerce (LHS)

0.4B

Traditional E-commerce (LHS)

Social Commerce Share (RHS)

TikTok
1.1B

WhatsApp

Facebook

1.8B

2.2B

ShopifyBusiness Launch – Omnichannel Selling – Payment Processing – Marketing
Analytics and Management – Logistics & Shipping – Business Funding

30%

$16

25%

$14
$12

20%

$10

15%

$8
$6

10%

$4

5%

$2
$-

0%
2018 '19'20'21'22 '23E '24E '25E '26E '27E '28E '29E '30E

*We estimate each platform’s monthly active users (MAUs) across its iOS and Android mobile apps. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from externalsources, including Sensor Tower, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or arecommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

Share Of E-commerce$18

Gross Merchandise Value($ Trillions)

DIGITAL CONSUMERS

Global Social Commerce Sales
ARK Forecast

69

Mobile Sports Betting Continues To Grow And Consolidate In The US
Thanks to legalization and consumer adoption, the winners in online sports betting are pulling away from the pack. As online
sports betting surged 35% during 2023, DraftKings and FanDuel offered superior user experiences that helped take share fromother sportsbooks. DraftKings and FanDuel grew their share of national deposits to 75% in 2023, while the long tail of sportsbooks
lost 8 percentage points of share.
National Deposit Market Share

Legalized States (LHS)

Future Legalizations (LHS)

DraftKings and FanDuel

All Other Sportsbooks

Online Penetration (RHS)

Oct-23

Jul-23Apr-23Jan-23Oct-220%Jul-22'22 '23E '24E '25E '26E '27E '28E '29E '30E

Apr-22'21

Jan-22'20

Oct-212018 '19

Jul-210%

Apr-21$-

20%

Jan-2125%

40%

Oct-20

$100

124%
CAGR

60%

Jul-2050%80%Apr-20$300

75%Jan-2022%
CAGR

Sportsbook Share

$400

$200

100%

100%

% of Total Volume$500$ Billions

DIGITAL CONSUMERS

US Online Sports Betting Volume

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including Yipit Data, which may be provided upon request. Forecasts are inherently limited
and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future
results.

70

Online Experiences Are Becoming More Immersive And Monetizable
History suggests that deeper immersion leads to higher monetization. After computer graphics expanded the market beyond textbased adventure games in the 1980s, gaming revenue soared 19% at an annual rate, from $6 billion in 1985 to $24 billion in 1993.
Now, multimodal AI—text, images, audio, and video—are creating more immersive and interactive experiences that should expand
the market.
Gross Platform Monetization Rates**

Text Games (LHS)

All Other Games (LHS)

Gaming Revenue (RHS)
$45

$30

60%

$25
$20

40%

$15
$10

20%

$5

Streamed Audio

Streamed Video

Dating Apps

Video Games

$1.40
$1
$1.000$0.1$0.100

$0.07

$0.15

$0.23

$0.0016$0.010
$0.01

'05

'03

'01

'99

'97

'95

'93

'91

'89

'87

'85

'83

'81

'79

'77

$1975

0%

($2023 Billions)***$35

Gaming Revenue

$40
80%

Text-based AI$10$10.000

Net Monetization Per Hour

100%

Share Of Games Released

DIGITAL CONSUMERS

Video Games Evolution*$0.001*”Text games” refer to both text-based and spreadsheet-based games. “All other games” exclude arcade game releases. Gaming revenue captures PC and console gaming revenue only **We estimate various platforms’
ability to monetize on direct consumer spend only.. ***Revenue figures have been inflation-adjusted to 2023 US Dollars. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying
data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or arecommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

71

Thanks To AI-Assisted Creation, Gamers Could Become Developers
AI-assisted game creation on user-generated content (UGC) platforms could cause an explosion in gaming content. According toour research, after normalizing for output quality, the cost of generating a single 3D asset has dropped ~99% at an annual rate toless than $0.06 since 2021. AI should democratize content creation and accelerate the growth in UGC. Roblox already hasdelivered more than ~470 million experiences globally, 52x the combined number of PC, console, and mobile app games.
Number Of Video Game Releases
Traditional Games

Mobile Games

Roblox Experiences$1E+03$1,000>99%
Annualized
Cost Decline

109
1.E+03Cumulative Number(Log Scale)$100$1E+02

Dollar Cost per 3D Asset(Log Scale)

DIGITAL CONSUMERS

Cost Decline In Generative AI For 3D Assets*$10$1E+01$1$1E+00$0.1$1E-01$1E-02$0.01
Oct-21

Generative AI lowers thecost of UGC.

1.E+02108
1.E+01107
1.E+00106
1.E-01105
1.E-02104
1.E-03103

Atariintroduces the
Atari 2600.
Apple launches
the first iPhone.

102
1.E-04Feb-22

May-22Aug-22

Dec-22Mar-231975 '78 '81 '84 '87 '90 '93 '96 '99 '02 '05 '08 '11'14'17 '20 '22

Date of Publication*We normalize the cost of 3D asset generation by each model’s CLIP R-Precision scores. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including
Nichol et al. 2022, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation tobuy, sell, or hold any particular security. Past performance is not indicative of future results.

72

The Market For Virtual Reality Is Nascent
Despite significant headset improvements, including Apple's Vision Pro, developers have not flocked to support virtual reality (VR).
Without compelling use cases, adoption has been slow. Meta Quest, for example, is offering only 2,200 apps—a fraction of the553,000 the iPhone boasted five years after its launch. As a result, Meta has sold only 27 million Quest units, 18% of the 146 million

Apple iPhone vs. Meta Quest
Headset Shipments
Apple iPhone

iOS vs. Meta Quest Apps
iOS Apps

Meta Quest

Units(Thousands) (Log Scale)

140
120

(Millions)

Meta Quest Apps

1,000

160

Cumulative Units

DIGITAL CONSUMERS

iPhones Apple sold cumulatively five years after launch.

100
80
60
40
20
0
1

2

3

Years After Launch

4

5

100

10

1

0
1

2

3

4

5

Years After Launch

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

73

AI Could Redefine Personal Computing
As computing transitioned, hardware cycles compressed from 35 years for the personal computer to 20 years for the smartphone,causing the consolidation of software players. More rapid adoption of AI-enabled hardware could accelerate the consolidation ofsoftware providers.

DIGITAL CONSUMERS

Time To Penetrate 75% Of The US Population

Computer

35

Smartphone0

Windows, Commodore 64 OS,
Atari TOS, Amiga, Linux, MacOS…

Windows, MacOS, Linux

GPT-4, Claude 2, Mixtral,
Llama 2, Grok…

?

HardwareOperating System
Consolidation

BB OS, Windows Phone, iOS,
Symbian, Android, Palm OS…

20

AI-Enabled

Software Expansion

10

20

30

iOS, Android

?

40

Years

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including DeGusta 2012, which may be provided upon request. Forecasts are inherently
limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of
future results.

74

Digital Consumption Is Outpacing Economic Growth
Globally, consumers spent 20% of their $34 trillion leisure budget on digitally-facilitated goods and services in 2023. Based on theshift toward digital leisure, real digital revenue* could increase 16% at an annual rate during the next seven years, from ~$1.8
trillion to $5 trillion, and account for 43% of all leisure spending in 2030.
Global Digital Leisure Spend**
Indirect (LHS)

DirectShare of Total Leisure Spend (RHS)

$25

35%
$15

30%
25%

$10

20%
15%

$5

10%
5%

$-

0%
2018 '19'20'21'22 '23E '24E '25E '26E '27E '28E '29E '30E

$5$4

$ Trillions

40%

Share of Leisure Spend$20

Indirect

$6

50%
45%

$ Trillions

DIGITAL CONSUMERS

Direct (LHS)

Global Digital Platform Revenue

$3
$2
$1
$2018

'19

'20

'21

'22

'23E '24E '25E '26E '27E '28E '29E '30E

*We define digital platform revenue as the gross revenues of US sports betting, global video game software and services, global digital video, and global digital audio. We also include net e-commerce platform revenue andnet NFT creator fees and platform revenue on a global basis. **Direct includes spend across e-commerce, video game software, digital video, digital audio, NFTs, and US mobile sports betting. Indirect includes spend acrossall digital ads. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited andcannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future
results.

BIG IDEAS 2024

75

Research By:

Andrew Kim
AnalystDigitalWallets
Closing The Loop With
Two-Sided Networks
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

76

Vertical software refers to a suite of solutions tailored to the needs of specificindustries. Leading vertical software platforms are expanding rapidly into financial
services for consumers and merchants. With two-sided networks, such software
could facilitate closed loop transactions from consumer to merchant, merchant toemployee, and employee to merchant. ARK believes that digital wallets on these
DIGITAL WALLETS

platforms will enable fully closed payment ecosystems.
Block, Shopify, and Toast are compelling platforms likely to use digital wallets as
the nucleus of their consumer, merchant, and employee ecosystems. According toour research, closed loop consumer payments, merchant banking, and employee
payroll/payments could increase their revenues by 22-33% at an annual rate during
the next seven years, from $7 billion in 2023 to $27-$50 billion in 2030.**In this exercise, we forecast the core revenues of Block, Shopify, and Toast to grow 22% at an annual rate over the next seven years. Summing the mentioned revenue opportunities on top of our core revenues forecast
increases the annual growth rate from 22% to 33% over the next seven years. We primarily model Block’s historical revenue and future revenue opportunity across its Square merchant ecosystem and do not incorporate
Cash App or Afterpay revenues independent of Square. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided uponrequest. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past
performance is not indicative of future results.

77

Vertical Software Platforms Are Consolidating Financial Services
In addition to enabling core business operations, vertical software providers like Block, Shopify, and Toast are consolidating
financial services for merchants. With digital wallets at their core, and partnering with sponsor banks and fintech companies or
activating their own banking charters, vertical platforms should eliminate myriad merchant interactions with less efficient legacy
financial institutions.

DIGITAL WALLETS

Consumer*
DigitalWalletMerchant

Payroll

Checking

Savings**

Debit Card

CreditCard

Working
CapitalFinancingBill Pay***

Block

ShopifyToast*We consider Block’s Cash App and Toast’s MyToast mobile app as consumer digital wallets, and we consider Shopify’s Shop mobile app and Toast’s Toast Takeout mobile app as digital wallets in their early stages. **We consider
Shopify Balance as both a checking and savings vehicle for merchants. ***Given xtraCHEF’s invoice automation features, we believe Toast will soon offer direct bill pay on its platform. Sources: ARK Investment Management LLC,
2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only andshould not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

78

Vertical Software Platforms Are Consolidating Consumer Services
Vertical software platforms are not only enabling vast merchant networks but also building consumer networks using digitalwallets. By scaling merchant and consumer networks simultaneously, vertical software platforms are becoming operating systems
for these two-sided networks.
Merchant

Consumer*

DIGITAL WALLETS

Payments

Checking

Savings

Debit
Card**

Buy Now
Pay Later

Personal
Lending

Ecommerce

Loyalty

DigitalWalletBlock

ShopifyToast*We consider Block’s Cash App and Toast’s MyToast mobile app as consumer digital wallets, and we consider Shopify’s Shop mobile app and Toast’s Toast Takeout mobile app as digital wallets in their early stages. **We
consider the Toast Pay Card a form of consumer debit cards. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided uponrequest. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past
performance is not indicative of future results.

79

Two-Sided Networks Can Close The Financial Loop Between Consumers
And Merchants
Closed-loop payment ecosystems incorporate in-network money transfers in three ways: from consumers to merchants, frommerchants to employees, and from employees—cum consumers—to merchants. To build these payment ecosystems, platforms
must have: 1) large and engaged two-sided networks, 2) end-to-end visibility over merchant operations and finances, and 3)

DIGITAL WALLETS

vertical industry expertise.
Consumer

In-Network
Consumer
Digital Wallet

Merchants$$

VerticalSoftwarePlatform

In-Network
Payroll Service
Provider$In-Network
Merchant
Digital Wallet$

Employees
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

80

Digital Wallets Are Likely To Disintermediate Consumer-To-Business (C2B)
Payment Ecosystems
Transactions funded with digital wallet balances bypass banks and card networks, saving interchange fees for payment facilitators,
merchants, and consumers. In ARK’s view, vertical software platforms with scaled consumer and merchant ecosystems willleverage digital wallets to facilitate closed-loop transactions.*

DIGITAL WALLETS

BEFORE: C2B Card Payment Authorization
Steps:
9

AFTER: C2B Closed-Loop Payment Authorization
Steps:
3

Card Network

PSP Take Rate:
1.1%

5

PSP Take Rate:
2.3%

6
4

3

Issuing Bank

Funding
SourceAcquiring Bank

2

9

1

Payment Service
ProviderIssuing Bank

Acquiring BankIn-Network

In-Network

1
7

Consumer

Card Network

8

Merchant

Consumer
Digital Wallet

2

Payment Service
Provider3

Merchant

Transaction Authorization
Transaction Settlement*Payment processes and associated fee estimates are rendered for illustrative purposes only. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources,
which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or
hold any particular security. Past performance is not indicative of future results.

81

Closed-Loop Payment Volume In The US Could Increase 24-Fold By 2030
According to ARK’s research, total C2B digital wallet payments should increase 20% at an annual rate during the next seven years,
from ~$2 trillion in 2023 to ~$7 trillion in 2030. As a percent of the total, closed-loop payments should increase from ~4% to 25%,
taking the payments revenue forecast for Block’s Square, Shopify, and Toast from $3.5 billion to ~$21 billion, a 29% annualized rateof gain.**
US Payment Revenue
For Block's Square, Shopify, And Toast% of PCE (RHS)$8Net Payment Revenue
30%

$7

25%

$6

20% CAGR

$5
$4

20%
15%

$3

10%

$2
5%

$1
$-

0%
2018 '19'20'21'22 '23E '24E '25E '26E '27E '28E '29E '30E

C2B Payment Revenue ($ Billions)

Closed Loop

Percent of Personal Consumption

Open Loop

C2B Volume ($ Trillions)

DIGITAL WALLETS

US Digital Wallet Transaction Volume*

Closed Loop Payment Revenue Opportunity

$25
$20

29% CAGR

$15
$10
$5
$2019

'20

'21

'22

'23E '24E'25E '26E '27E

'28E

'29E

'30E

*We define closed-loop transactions as any consumer-to-buyer (C2B) digital wallet transaction that does not involve third-party issuers or card networks except for digital wallet balance top-ups. **Closed-loop payment
revenue is represented on a gross basis and will be shared between the software platforms and all enabling market participants such as other fintechs or sponsoring financial institutions. We primarily model Block’s
historical revenue and future revenue opportunity across its Square merchant ecosystem and do not incorporate Cash App or Afterpay revenues independent of Square. Sources: ARK Investment Management LLC, 2024.
This ARK analysis is based on a range of underlying data from external sources, including Worldplay 2019, 2020, 2021, 2022, 2023, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

82

Digital Wallets Could Disintermediate Merchant Banking
Vertical software platforms can serve merchants with financial services. With digital wallets, these platforms not only enhance
convenience but also monetize deposits, reducing the number of steps from payment authorization to merchant settlementfrom 16 to 5 and more than doubling the platform take rate.*
BEFORE: Status Quo Merchant Settlement

DIGITAL WALLETS

Steps:
9 + 7 = 16

AFTER: Closed-Loop Merchant Settlement
Steps:
3+2=5

Card Network

PSP Take Rate:
1.1%

14

PSP Take Rate:
2.3% 2.4%

12 15

13

Consumer Bank
Account

Consumer
Digital Wallet

Acquiring Bank

11

Card Network

16
In-Network

Merchant

10

Payment Service
ProviderMerchant Bank
Account

Merchant
Digital Wallet

Acquiring Bank

Issuing Bank

4

5

Payment Service
ProviderTransaction Authorization
Transaction Settlement*Payment processes and associated fee estimates are rendered for illustrative purposes only. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources,
which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or
hold any particular security. Past performance is not indicative of future results.

83

Merchant Digital Wallet Revenue Could Double By 2030
If net deposit yields were to equal those of large commercial banks, the merchant banking revenue associated with Block’s
Square, Shopify, and Toast could scale 40% at an annual rate during the next seven years, from $700 million in 2023 to $7 billion
in 2030. At $7 billion, the three platforms would 5x their share of total commercial payments revenue in the US from ~0.3% today
to ~1.6% in 2030.
Addressable US Merchant Banking Revenue
Merchant Lending

Incremental Banking Revenue$8

Gross Revenue ($ Billions)

DIGITAL WALLETS

For Block's Square, Shopify, And Toast*

$7
$6
$5
$4
$3
$2
$1
$2019

'20

'21

'22

'23E

'24E

'25E

'26E

'27E

'28E

'29E

'30E

*Our incremental banking revenue forecast intends to capture both net interest income and noninterest revenue associated with merchant deposits and lending that are not already included in our forecast for Block, Shopify,
and Toast’s working capital financing business. Both line items are represented on a gross basis and will be shared between the software platforms and all enabling market participants such as other fintechs or sponsoring
financial institutions. This forecast does not directly include revenue from instant transfers, corporate card issuance and spend management, or bill pay. We primarily model Block’s historical revenue and future revenue
opportunity across its Square merchant ecosystem and do not incorporate Cash App or Afterpay revenues independent of Square. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range ofunderlying data from external sources, including McKinsey & Company 2018, 2019, 2020, 2021, 2022, 2023, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational
purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

84

Digital Wallets Could Disintermediate The Payroll Banking Opportunity
Vertical software platforms probably will use digital wallets to link merchants directly to employees, adding monetization
opportunities with little to no cost of customer acquisition.*
BEFORE: Status Quo Payroll

DIGITAL WALLETS

Steps:
9 + 7 + 5 = 21

AFTER: Closed-Loop Payroll
Steps:
3+2+3=8

ACH Network

PSP Take Rate:
1.1%

19

PSP Take Rate:
2.4% 2.8%

20

Payroll Service
ProviderPayroll Service
Provider**Merchant Bank
Account

Merchant Bank
Account

621

18

ACH Network

In-Network

In-Network
Merchant

17

Payment Service
ProviderEmployee Bank
Account

Merchant Digital
Wallet7

Payment Service
Provider8

Employee
Digital Wallet

Transaction Authorization
Transaction Settlement*Payment processes and associated fee estimates are rendered for illustrative purposes only. **In this example, we assume the PSP offers a first-party or white-labeled third-party payroll solution. Sources: ARK Investment
Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational
purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

85

Employee Digital Wallets Represent A Potential $25 Billion Revenue
Opportunity
Like their consumer counterparts, employee digital wallets could evolve into full-scale financial apps customized for specificindustries. Employee payroll and payments could become compelling monetization streams for Block, Shopify, and Toast.
According to our research, employee digital wallets could generate $25 billion of gross revenue on the $1 trillion in addressable
payroll opportunities in 2030.* If these platforms were to capture 100% of this opportunity, employee digital wallet revenue

US Employee Digital Wallet Revenue Opportunity For Block, Shopify, And Toast**
Payroll Software Revenue
Gross Revenue ($ Billions)

DIGITAL WALLETS

could grow 123% at an annual rate during the next seven years.

Employee Debit Revenue

Employee Credit Revenue

$30
$25
$20

123% CAGR

$15
$10
$5
$-

$15B

$6B
~$100M

$5B
2023E

2030E

*Our forecasted ~$1 trillion in annual payroll aggregates our forecasts for Block, Shopify, and Toast’s merchant base, employee base, and average payroll across addressable verticals such as retail, accommodations andfood services, other consumer services, professional services, and other consumer entertainment. **All revenue is represented on a gross basis and will be shared between the software platforms and all enabling market
participants such as other fintechs or sponsoring financial institutions. Payroll software revenue does not include float revenue, and we do not adjust for duplicate employee debit and credit revenues that may already beembedded in consumer payment revenue. We primarily model Block’s historical revenue and future revenue opportunity across its Square merchant ecosystem and do not incorporate Cash App or Afterpay revenues
independent of Square. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently
limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of
future results.

86

Digital Wallets Could Generate $23 Billion In Vertical Software Revenue
According to ARK’s research, the core revenue of Block’s Square, Shopify, and Toast should increase 22% at an annual rate during
the next seven years, from $7 billion in 2023 to $27 billion in 2030. Closed loop consumer payments, merchant banking, andemployee payroll/payments could generate an additional $23 billion, accelerating revenue growth from 22% to 33% at an annual
rate by 2030.
US Revenue Opportunities For Block’s Square, Shopify, And Toast*
Closed Loop Payments

Merchant Banking

Payroll Software

Employee Payments$60$50$ Billions

DIGITAL WALLETS

Core Revenues$40

33% CAGR

$30
$20
$10
$2019

'20

'21

'22

'23E

'24E

'25E

'26E

'27E

'28E

'29E

'30E

*Core revenues include software revenue, net open-loop payment revenue, merchant lending revenue, and revenue attributable to all other extant business lines. Merchant banking revenue includes both net interest income
and noninterest revenue attributable to merchant deposits and lending not already captured by our forecast for Block, Shopify, and Toast’s working capital financing business. All revenue segments excluding net open-loop
payment revenue, closed-loop payment revenue, and employee payment revenue are represented on a gross basis, and all revenue will be shared between the software platforms and all enabling market participants such asother fintechs or sponsoring financial institutions. We use our status quo forecasts the software platforms’ net take rates to estimate net employee payment revenue and do not explicitly estimate incremental cost synergies
from employee closed-loop payments. We view all revenue segments except for core revenues not as explicit forecasts but as addressable opportunities in the US for Block’s Square, Shopify, and Toast. We primarily model
Block’s historical revenue and future revenue opportunity across its Square merchant ecosystem and do not incorporate Cash App or Afterpay revenues independent of Square. Sources: ARK Investment Management LLC, 2024.
This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not
be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

87

Research By:

Alexandra Urman

Pierce Jamieson

Rong Guo

AnalystAnalystResearch Associate

Precision
Therapies
Curing Disease More Efficiently
And Less Expensively
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

88

During the past twenty years, new modalities for precision therapies, CRISPR gene
editing, RNA therapeutics and targeted protein degradation have proliferated.
Innovative therapies powered by artificial intelligence (AI), CRISPR gene editing, andnew sequencing technologies have increased returns on research and development
PRECISION THERAPIES(R&D), while enabling undruggable targets to become druggable.
Increasingly, precision therapies are becoming multiomic and curative, withmechanisms of action spanning DNA, RNA, proteins, and more. Based on ARK'sresearch, the enterprise value of companies focused on precision therapies could
appreciate 28% at an annual rate during the next seven years, from ~$820 billion in
2023 to ~$4.5 trillion by 2030.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

89

New Therapeutic Modalities Are Proliferating
During the last thirty years, the number of therapeutic modalities with entirely new mechanisms of action has proliferated. Not
only have they expanded the number of treatable diseases, but they have also improved efficacy and safety. In 2023, more than
25% of clinical trials were harnessing new therapeutic modalities.
Base/Prime Editors*
TPDsγδ T-cells
mRNA Vaccines
CRISPR/Cas9
iPSCs

PRECISION THERAPIES

Discovery of New Modalities Based On
Investigational New Drug Application Approval

TALENS

Small Molecules
Aspirin (1899)
Proteins
Insulin (1921)

1900

CAR-T
ZFNs
siRNA/RNAiRNA Aptamers

Antibiotics
Penicillin (1928)
Small Peptides
Oxytocin (1953)

1920

1940

*This timeline is not exhaustive.

Watson & Crick(1953)

Antibody-Drug Conjugates
Monoclonal Antibodies
TILs
Prodrugs

1960
Recombinant
DNA (1972)
Sanger Sequencing(1977)

ASOs

1980

2000

Polymerase
Chain Reaction(1982)

Sequencing by
Synthesis (1996)

2020
Single Molecule RealTime Sequencing (2011)

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including Biomedtracker, which may be provided upon request. Forecasts are inherently limited and cannot be
relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

90

Precision Therapies Could Reverse The Downtrend In Returns On Research
And Development (R&D)
Given regulatory bottlenecks and legacy drug discovery methods, the return on therapeutic R&D has been falling for nearly 25
years. According to our research, novel therapeutic modalities and R&D methods, coupled with regulatory approval of “precision”
therapies, could reverse the downward trend in return on investment in the pharmaceutical industry.

R&D Devoted to Drugs Released$180

Incremental Revenue Yield

$160
$140
$120

Billions

PRECISION THERAPIES

Average Annual R&D And Incremental Revenue Attributable To Drugs Released

$100
$80
$60
$40
$20
$0
1981 to 1985

1986 to 1990

1991 to 1995

1996 to 2000

2001 to 2005

2006 to 20102011 to 20152016 to 20202021 to 2023**Shorter time frame. Data impacted due to COVID.
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including Biomedtracker and Ycharts, which may be provided upon request. Forecasts are inherently limited andcannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

91

Precision Therapies Could Reverse The Downtrend In Returns On R&D
Given regulatory bottlenecks and legacy drug discovery methods, returns on therapeutic R&D declined on balance for ~35
years through 2020. Regulations permitting novel therapeutic modalities and R&D methods enabling “precision” therapies
could reverse the downtrend during the next five to ten years.
Ratio Of Incremental Revenue To Related R&D Spend
1.6
1.4
1.2

Ratio

PRECISION THERAPIES

1.8

1
0.8
0.6
0.4
0.2
0
1981 to 1985

1986 to 1990

1991 to 1995

1996 to 2000

2001 to 2005

2006 to 20102011 to 20152016 to 20202021 to 2023*

2030 forecast

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including Biomedtracker and Ycharts, which may be provided upon request. Forecasts are inherently limited andcannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

92

Precision Therapies Are Helping Treat Diseases That Were Previously Undruggable
Precision therapies, including RNA-based medicines and “targeted protein degraders” (TPDs), are expanding not only the numberof druggable proteins in the human genome, but also the number of treatable tissue types.
TPDs Are Expanding The Druggable Proteome
Druggable

100%
80%
60%

44%
79%

40%
20%

56%
17%

0%

Conventional

The Number Of Duplicative Trials

Undruggable

4%

TPD-Enabled

Duplicative Trials per Unique Target% of Human Protein-Coding Genes

PRECISION THERAPIES

FDA Approved

Precision Therapies Are Reducing
3

2

-77%

1

0
GeneralPrecision

The human genome contains ~20,000 protein-coding genes, of which

Advanced precision therapy trials are testing a wider variety of biologicalonly 864 (4.3%) are associated with drugs that the FDA has approved.

targets than was possible with status quo treatments, lowering the number

Human Protein Atlas estimates that 79% (~15,800) of human proteins areof duplicative trials by 77%. As a result, scientists are testing more biologicalundruggable. Our research indicates that TPDs and adjacent technologies

targets per dollar of R&D, increasing the probability of identifying uniquecould treat 56% (~11,200) of human protein-coding genes.

and successful therapies.

Data are as of December of 2023
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

93

The Value Of Curing Rare Diseases Like Sickle Cell Anemia Is High
Among precision therapies, gene editing medicines like CRISPR-Cas9 have the potential to cure rare genetic diseases such as
Sickle Cell Disease (SCD). SCD is an inherited red blood cell disorder that affects more than 100,000 people in the US and 20
million people globally, primarily in Africa. Today, therapeutics account for ~16% of the total spent on treating SCD disease in theUS, but they have done little more than manage symptoms, as the life expectancy of SCD patients is only 56% that of the general

Reasonable Cost For Sickle Cell Disease CureSCD Healthcare Costs Over Average Patient Lifetime
Therapeutics

Other Costs
$2.5

$2.5

$2.0

Millions$2.0

Millions

PRECISION THERAPIES

population.

$1.5
$1.0
$0.5
$0.0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53

Age

$1.5
$1.0
$0.5

Other Costs$0.0

Therapeutics
Current Direct Cost Quality of Life Years Gained * New Therapy Cost
Forecast*Quality of Life Years Gained = Health Utility * Duration
For Health Utility, 0 means dead and 1 means full health
Data are as of December of 2023.
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

94Curing All Rare Diseases Would Be Valuable
The US healthcare system spends approximately $450 billion per year on the treatment of rare diseases. To manage patients withrare diseases throughout their lifetimes, the cost could mount to $20 trillion, of which less than half would be for medication.
Theoretically, curing all rare diseases would shift most of the costs to medication, obviating the need for in- and out-patient
disease management, underscoring the value of a cure.
Forecasted Value of Rare Disease Cures
To Healthcare System Over 50 Years

Medication Costs$25

Other Costs

$20

$25

Trillions$20

Trillions

PRECISION THERAPIES

Aggregate US Rare Disease Healthcare Costs

$15
$10
$5

$15

$10

$5

$1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

Years

$0

Avoided Direct Costs

Value of QALYs Gained *Total Value*Quality of Life Years Gained = Health Utility * Duration
For Health Utility, 0 means dead and 1 means full health
Data are as of December of 2023
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including Orphanet 2023, which may be provided upon request. Forecasts are inherently limited and cannot be
relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

95

Sizing the Opportunity: Precision Therapies
Based on our research, as technologies like CRISPR gene editing, sequencing, and artificial intelligence (AI) create precision
therapies, the enterprise value of precision therapy companies should appreciate at a ~28% compound annual growth rate
(CAGR) during the next seven years, from ~$820 billion in 2023 to ~$4 trillion by 2030.
Precision Therapy Enterprise Value Should Appreciate 28% Annual Rate Through 2030
Gene Editing/Therapy

RNA Therapeutics

Antibodies

Precision Small Molecules

$5.0

CAGR

$4.5

21%

$4.0

11%

$3.5

Trillions

PRECISION THERAPIES

Cell Therapies

16%

$3.0

46%

$2.5
$2.0
$1.5

34%

$1.0
$0.5
$0.0
2023

2030
Forecast

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including S&P Capital IQ Data and Biomedtracker, which may be provided upon request. Forecasts are inherently
limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of
future results.

Nemo Marjanovic

AnalystResearch Associate

Research By:

BIG IDEAS 2024

Pierce Jamieson

96

Multiomic Tools
And Technology
Translating Biological Insights Into
Better Healthcare And Economic Value
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

97Over the past decade, the number of biological tools and techniques has proliferated,their capability having improved remarkably. Among others, three enabling technologies
stand out: high-throughput proteomics, artificial intelligence, and single-cell sequencing.

MULTIOMIC TOOLS AND TECHNOLOGY

Their convergence is increasing productivity and efficiency, enhancing precision in
healthcare applications, and unlocking substantial economic value.
According to ARK’s research, these technologies could reduce research and development(R&D) spending per drug by more than 25%, potentially increasing the enterprise value ofthe precision therapy space 26% at a compound annual rate during the next seven years,
from ~$820 billion in 2023 to ~$4.5 trillion in 2030.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

98

Proteomic Throughput And Depth Are Improving Exponentially
Advances in mass spectrometry and bioinformatics have improved proteomic analysis dramatically over the past decade,increasing resolution, accuracy, and the capacity to analyze multiple samples simultaneously. Not only have these developments
enabled detailed exploration of the proteome in health and disease, but they also have accelerated the discovery of cancer

100,000

10,000Throughput (LHS)
Depth (RHS)

120% CAGR(Throughput)

10,000

100

10

1,000

40% CAGR(Depth)1,000

Unique Proteins/ Sample

Proteins Analyzed Per Hour

MULTIOMIC TOOLS AND TECHNOLOGY

biomarkers and the development of targeted therapies.

1

100

0

2011
SRM
XL-MS
ITRAQ
TMT*

2012

2013

SWATH-MS
HRAM**

2014

Parallel
Reaction
Monitoring2015

Ion-Mobility
Mass Spec2016

Real-Time
Search2017

2018

AI/ML***
Techniques

2019

2020

Single-Cell
Proteomics

2021

2022

2023

Real-Time Single
Molecule Proteomic
Sequencing*SRM: Single reaction monitoring; XL-MS: cross-linking mass-spectrometry; ITRAQ: isobaric tagging; TMT: tandem mass spectrometry. **SWATH-MS: sequential window acquisition of all theoretical fragment ion spectra mass
spectrometry. ***AI/ML: Artificial Intelligence/Machine Learning. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including Peters-Clarke et al. 2023, and Zhang and Cui2022, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or holdany particular security. Past performance is not indicative of future results.

99

Wright’s Law* Has Predicted The Cost Decline Of Proteomics
As the number of proteomes analyzed by mass spectrometry has increased, costs have dropped dramatically, unlocking new
possibilities in medical research and diagnostics. Our research suggests that for untargeted proteomics using mass spectrometry,the cost per sample is declining 23% at an annual rate, or ~11% for each cumulative doubling in the number of proteomes
and treatment for unique cancer subtypes.
US Trials With Patient Biomarkers

Wright's Law Has Predicted The Cost Decline For Untargeted Proteomics
475$10,000

425

2011

2013

Number Of Trials$1,000

Cost/Sample

2021
2023

$100

$10

+9% CAGR(2010-2021)

375
325
275
225
175

$1

Cumulative Proteomes Sequenced

Year

Wright’s Law states that for every cumulative doubling of units produced, costs will fall by a constant percentage. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources,
which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or
hold any particular security. Past performance is not indicative of future results.

2023

2022

2021

2020

2019

108

2018

107

2017

106

2016

105

2015

104

2014

103

2013

102

2012

101

2011

100

125
2010

MULTIOMIC TOOLS AND TECHNOLOGY

sequenced. Proteomic discoveries are paving the way for the identification of novel biomarkers, enabling the earlier detection

100Single-Cell RNA Sequencing Is Revolutionizing Our Understanding
Of Cancer
While traditional gene expression analysis using RNA-seq can measure only the expression of genes in a mixture of different
cell types, single-cell RNA-seq (scRNA-Seq) can delineate the expression of different cell types in a complex tissue sample.
by 76%.

RNA Sample
l
Bu

kR

Expression

Cancerous Tissue
eq
-S
A
N

No expression changes areevident in cancerous tissue
relative to normal cells.
Gene 1
Gene 2
CancerSin
glMultiple Cell Types

eCe
ll

RN

A

Gene 3

NormalGene 4

Expression

MULTIOMIC TOOLS AND TECHNOLOGY

Theoretically, linking gene expression to specific cells increases the accuracy of measuring by 10x and cuts costs per gigabyte

CancerCancerous mutations are
causing overexpression of“Gene 4” in “Cell Type 3”+-

Cell Type
1+-

Cell Type
2+-

Cell Type
3+-

Cell Type
4

Sources: ARK Investment Management LLC, 2024. Illustration created with BioRender.com, based on data from Hwang et al. 2018. For informational purposes only and should not be considered investment advice or arecommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results. Forecasts are inherently limited and cannot be relied upon.

AI And Automation Are Empowering Drug Discovery
The implementation of Artificial Intelligence/

Forecasted Reduction In Cost/Approval Attributable To AI/Automation

Machine Learning (AI/ML) in the drug discovery

screen from virtual and physical libraries.
High-throughput automated workflows likedrug microsynthesis and in-vitro/in-vivo assays

$600
$500
$400

cut the cost of a single drug approval in half.

-$280mm

Automated
Preclinical
Workflows$440mmSavings From
Probability Of
Approval
Improvement

$300
$200

30%

Forecasted Probability
Of Clinical Success

25%

implementing AI/ML drug discovery methods

compounds and increasing productivity should

Approval
Cost

AI-Enabled
Library
Screening

Precision
Therapy
Approval
Cost$0

Within the next decade, companies

to approval. Earlier in the process, eliminating-$45mm$700

discovery.

their probability of clinical success from Phase 1-$135mm$800

are critical to leveraging AI-enabled drug

and automated workflows are likely to double$900mm$100

Percent

MULTIOMIC TOOLS AND TECHNOLOGY

active compounds that drug developers can$900

Average Cost
Per Approval ($MM)

process has increased the number of potential$1,000

20%

2.1x

15%
10%
5%
0%

LegacyPrecision

Forecasted Cost Per Approval
Cost/Drug Approval ($MM)

101$1,000
$800

0.5x

$60 0
$400
$200
$0

LegacyPrecision

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, including Recursion 2024, , Paul et al. 2010, Schreiber 2022, and Dreiman 2021, which may be provided uponrequest. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past
performance is not indicative of future results.

102

Drug Development Costs Could Drop Precipitously
Advances in fundamental biology, artificial intelligence, automation, and trial design should lower preclinical drug development costs significantly.
They enable methods that eliminate less-promising candidates early in the drug development process, prevent downstream misallocation of R&D
capital, and create a larger chemical search space early in the discovery phase. During the next decade, companies leveraging these techniques fully
could lower costs per approval by almost 50%, in part by more than doubling the odds of success for those drug candidates that do enter clinical

Efficiency Innovations

R&D Cost Per Drug Approval

Fundamental Biology+ Single-Cell Biology+ Proteomic Techniques+ Virtual Compound Libraries+ Biomarker Development+ Humanized animal models$700

Artificial Intelligence+ AI-Enabled Pathway Analysis+ AI-Enabled Toxicity Prediction+ In-Silico Molecular Modeling+ ML-Driven Compound Screens

-48%

$600
$500
$400
$300
$200

Probability Of Clinical Success

$900
$800

+ Automated Liquid Handling+ Automated Invivomics+ Automated Microsynthesis+ CRISPR “Perturb-Seq” Screens+ Organ-on-a-chip Technology

30%$1,000+ Adaptive Clinical Trial Design+ Precision Biomarkers+ Decentralized/Virtual Trials

Automation

Clinical Success Probability(Including Failures)

Innovative Trial Design($ Millions)

MULTIOMIC TOOLS AND TECHNOLOGY

trials.

25%

20%

2.1x

15%

10%

5%

$100
0%

$0

LegacyPrecision

LegacyPrecision

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

103Technological Advances Should Lower R&D Costs For Each Drug
During the past decade, R&D spending per drug in development has declined by 3% at an annual rate. According to our research,
this decline should continue, if not accelerate, thanks to groundbreaking advancements in fundamental biology, single-cellsequencing, proteomics, automation and artificial intelligence. Together, these efficiencies should contribute $1.5 trillion, or ~40%,

Precision Therapy Sales
Could Grow 30% Annually Into 2030

Projected Average Annual R&D Spending

$6

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

$5

$400
$300
$200
$100
$20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30

$7

Projected

20
06

$8

$500

20
04

Market Expe ctation$9

Historical PT Sales

20
02

ARK Projection

$10

$600

20
00

Historical$11($ Billions)$12

Precision Therapies Annual Sales

$700

20
08

Per Drug In Development Pipeline

Global, $ Millions

MULTIOMIC TOOLS AND TECHNOLOGY

to the increase in enterprise value for precision therapies by 2030.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

104

Research By:

Sam Korus

Daniel Maguire, ACA

Director of Research,
Autonomous Technology& Robotics

Research AssociateElectric
VehiclesLower Battery Costs
Powering EV Adoption
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

105

After increasing in response to supply chain disruptions, battery costs now
are falling in line with Wright’s Law, leading to lower electric vehicle (EV)sticker prices.

ELECTRIC VEHICLES

If robotaxi platforms proliferate, EVs could account for 95-100% of vehicle
sales in 2030.
ARK forecasts that electric vehicle sales will scale 33% at an annual rateduring the next seven years, from roughly 10 million in 2023 to 74 million in
2030.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

106Electric Vehicles Continue To Take Share From Internal Combustion Engine
VehiclesGlobal Vehicle Sales GrowthInternal Combustion Engine

Battery Electric Vehicles
113%

120%

80%

Percent Change

ELECTRIC VEHICLES

100%

70%
59%

60%

33%

40%

28%

18%

20%

9%

1%

0%

-2%
-20%

-4%

-4%
-15%

-40%
2018

2019

2020

2021

2022

2023e

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including EVVolumes.com, which may be provided upon request. Forecasts are inherently
limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of
future results.

107

The Auto Industry Is Likely To Consolidate
If EV adoption continues to gain traction, traditional automakers may be forced to restructure and consolidate.

Global Battery Electric Vehicle Sales

GM Delays EV Truck Production At Michigan
Plant By Year

Market Share*
15%

VW Group Delays EV Battery Plant In Europe
Amid “Sluggish” EV Demand“There is for the time being no business rationale for
deciding on further sites,” Volkswagen Group CEO Oliver
Blume said.

10%
Percent

ELECTRIC VEHICLES—Reuters Oct 17, 2023

5%

—InsideEVs Nov 2, 2023

Ford Will Cut Weekly Production Of F-150
Lightning In Response To Slowing Demand

0%
2013

2014

2015

2016

2017

2018

2019 2020 2021

2022 2023e—The Verge Dec 11, 2023
*BEV market share is calculated relative to all “light vehicles”, which are vehicles with a maximum Gross Vehicle Weight Rating (GVWR) of < 8,500 lbs. Sources: ARK Investment Management LLC, 2024, based on data from
EVVolumes.com 2023, Hawkins 2023, Mihalascu 2023, Shepardson & Klayman 2023, Rosevear 2023, Transport Policy 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only andshould not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

108

Wright’s Law Has Modeled The Decline In Battery Costs Accurately
According to Wright’s Law, for every cumulative doubling in the number of kWh produced, battery costs will fall by 28%. Lithium
iron phosphate (LFP) cells are taking share from nickel-rich cells, illustrating the difficulty of forecasting commodity prices asbattery chemistries change over time.
Global LFP Cathode Chemistry
Share Of Passenger EV Sales

Battery Cost Decline
Nickel Forecast

LFP Cells*

LFP Forecast
45%$10,000

40%
35%$1,00030%$/kWh

ELECTRIC VEHICLES

Nickel Cells*

25%
$100

20%
15%

$10

10%
5%

$1
100,000

1,000,000

10,000,000

100,000,000

1,000,000,000

10,000,000,000

0%
2019

2023

Cumulative kWh*Combination of modeled and historical data. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including Bloomberg New Energy Finance 2023,
which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or holdany particular security. Past performance is not indicative of future results.

109

Wright’s Law Points To Faster EV Charging Rates
The EV charging rate seems to be a good proxy for overall performance, including efficiency, range, and power. In the past five
years, charging rates for 200 miles of range have improved nearly three-fold, from 40 minutes to 12, and could drop anotherthree-fold to 4 minutes over the next five years. As EV charging reaches acceptable rates, manufacturers are likely to optimize forother features, including autonomous driving, safety, and entertainment.

Historical Data Points

2027 Forecast

10,0001915: 2,314 minutes
1,000

To Charge 200 Miles

Theoretical Number Of Minutes

ELECTRIC VEHICLESEV Charging Rates For 200 Miles Of Range

2018: 40 minutes

100

1999: 188 minutes
102022: 15 minutes
2021: 20 minutes

12023: 12 minutes
2027(e): 4 minutes

0
0
1

10

100

1,000

10,000100,000

1,000,000

10,000,000

100,000,000

Cumulative Units Of Electric Vehicle Production
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

110

Many EV Manufacturers Are Struggling To Scale Profitably
In the absence of an EV supply chain, Tesla had little choice but to vertically integrate. Now that the supply chain is evolving,other auto manufacturers will reach profitability if they scale. Many are pulling back from the market, however, because the—already profitable—market leaders are cutting prices aggressively.
Global Luxury BEV Unit Sales At Various Price Points*
450,000
Model Y (China)

Units (TTM As Of Aug 2023)

ELECTRIC VEHICLES

400,000
350,000
300,000
250,000

Non-luxury top
selling BYD
models in China
for context

200,000
150,000
100,000

Model Y (US)Model Y (Europe)
Model 3 (US)Model 3 (China)
Model 3 (Europe)

Zeekr 001 (China)
Audi Q4 e-tron (Europe)

Nio ET5 (China)

50,000$-$50,000$100,000$150,000$200,000

Price*Data may not be exhaustive. “TTM” (trailing twelve months). “BEV” (battery electric vehicle). Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from externalsources, including Piper Sandler 2023, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment
advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

$250,000

111

EVs Have Hit Price-Parity With Internal Combustion Engine Vehicles
As battery costs continue to decline, EV prices should fall, potentially driving exponential growth in unit sales.
US New Vehicle Transaction Price

Vehicle Price vs Addressable Market

New-Vehicle Transaction Price (Average)
New-Vehicle Transaction Price Before Supply Chain Bottlenecks
Linear (New-Vehicle Transaction Price Before Supply Chain Bottlenecks)

Luxury Car$75,000
Full-Size Pickup Truck$65,000
Average Price

ELECTRIC VEHICLES$85,000

Luxury Compact
SUV/Crossover$55,000

Electric Vehicle$45,000

Tesla Model Y
Tesla Model 3$35,000
Compact Car$25,000
2012

2014

2016

2018

2020

2022

Addressable Revenue Share By MSRP

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

2024

2026

125
$125

100
$100

75
$75

50
$50

25
$25

2023 US Dollars (Thousands)**Older data points adjusted to 2023 dollars using CPI. Segment average transaction prices are as of September 2023 as reported by Cox Automotive. Tesla Model Y LR price taken from Tesla website as of December
2023. Sources: ARK Investment Management LLC, 2024, based on data from Cox Automotive 2023.. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be
considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

0
$0

112

Internal Combustion Engine Vehicles Should Lose Significant Share
If EVs continue to gain share, as we believe they will, then used cars and new EVs will make more economic sense than new
internal combustion engine (ICE) vehicles, perhaps causing a death spiral for incumbent auto manufacturers. As EV and used car
prices fall, consumers could delay purchases, waiting for even lower price points.
Auto Sales
ARK EV Forecast

ARK ICE Forecast

IHS Markit Forecast

120
100
Units (Millions)

ELECTRIC VEHICLESHistorical EV Sales

80
60
40
20

2016

2017

2018

2019

Actual

2020

2021

2022

2023e

2024

2025

2026

2027

2028

2029

2030

Forecast

Note: Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be
relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

113

Research By:

Sam Korus

Daniel Maguire, ACA

Director of Research,
Autonomous Technology& Robotics

Research Associate

Robotics
Generalizing Automation Thanks To The
Convergence Of AI Software And Hardware
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

114

The convergence of AI and hardware should enable generalizable robotics.
Robots are outperforming humans in factory settings and should do so in many
domains. As hardware and software costs decline according to Wright’s Law, AI
should continue to improve productivity and create a new market opportunity for
ROBOTICS

generalizable robotics that, at scale, exceeds $24 trillion in revenue annually.

Wright’s Law states that for every cumulative doubling of units produced, costs will fall by a constant percentage. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying datafrom external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or arecommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

115

Thanks To AI And Computer Vision, Robots Should Be Able To Operate
Cost-Effectively In Unstructured Environments
Unstructured Environment

Humanoid Robots*
ConsumerDronesAgTech Robots$1,400,000 $1,200,000 $1,000,000 $800,000

Medical/Surgical Robots

Construction
Robots$600,000$200,000$150,000

Traditional Industrial
Robots$100,000$50,000$0

Collaborative
RobotsInexpensive

Autonomous Vehicles**Expensive

ROBOTICS

Large Military Drones

Warehouse
Robots

Structured Environment

Home
Appliances

The points in each category represent real world products with the exception of humanoid robots and autonomous vehicles *These figures are estimated costs of humanoid robots that we expect to hit the market. **Thesefigures are for both current operating and future robotaxis. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request.
Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance
is not indicative of future results.

116

Lower Prices Are Stimulating Demand For Industrial Robots
Industrial robot costs have been dropping 50% for every cumulative doubling in production.
Industrial Robots: Price Elasticity Of Demand
1996-2002

2002-20102010-20152016-20182009, 2019 and 2020

2021

2022

600,000
2022
2021

Unit SalesROBOTICS

500,000
2018

400,0002017

300,000

2016
2015
2014

200,000

2013
2012

2011
2007

100,000

-

2020

2019

1997

1996
$120

1998

1999
$100

2000

2001 2002 2003

2004

20052006

2008

2010

2009

$80

$60

$40

$20

Unit Price e
Thousands
Sources: ARK Investment Management LLC, 2024, based on data from The International Federation of Robotics 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should
not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

$0

117

Increased Performance Is Stimulating Demand For Industrial Robots
Advances in computer vision and deep learning have improved robot performance 33-fold in seven years. Robots are alreadysurpassing human performance by greater than a factor of two and it’s unclear where the upper limit will be.
Items Picked And Placed Per Hour
1,200

800
NumberROBOTICS

1,000

600
400
200
Robot

Robot

Robot

Robot

Human

Robot

2015

2016

2018

2019

2022

2022

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

118

Collaborative Robots Are Entering The Sweet Spot Of The Adoption Curve
Collaborative robots and humans are likely to operate together, whether on the road, in factories, or at home. Historically,
S-curves reach tipping points when the adoption of new technologies approaches 10-20% market share.*Industrial Robot Sales
Collaborative Robots

Unit Sales Of Collaborative Robots
As A Percent Of Total Industrial Robot Sales

Traditional Robots
12%

500

10%

400

8%

Percent

Thousand UnitsROBOTICS

600

300

6%

200

4%

100

2%

0

0%
2017

2018

2019

2020

2021

2022

2017

2018

2019

2020

2021

2022

*S-Curve refers to the typical technology adoption curve, which looks like an "S" when plotted over time. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data fromexternal sources, including International Federation of Robotics 2023 and Citi Research 2023, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes
only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

119

Many Companies Are Likely To Deploy More Robots Than Humans
Robots are freeing humans from tedious physical tasks.
Amazon Robots And Employees
RobotsEmployees (at start of year)

1,800

1,608

1,400

1,541

1,298
1,082*

1,200

Thousands

ROBOTICS

1,600

1,000

798

800
600

520

341

400
200
-

648

566

1

88

2013

117

231

154

15

30

45

2014

2015

2016

100
2017

140e

2018

200

2019

265e

2020

350

2021

2022

2023

*Modeled/annualized. Figures denoted with an “e” are ARK estimates. Sources: ARK Investment Management LLC, based on data from Amazon 2023 as of June 26, 2023. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

Automation’s Impact On Productivity Has Transformed Industries

16
14
12

At An Amazon Warehouse

14

80

12

70
60

10

10

-87%

8

Hours

Hours

ROBOTICSTime From Click To Ship

Time To Manufacture A Car

Time To Do Laundry

8

-88%

Minutes

120

50

-78%

40

6

6

30
4

4
2

2

0

0

20
10
0

BeforeAfter

BeforeAfter

BeforeAfter

Washing Machines

Washing Machines

Assembly Line

Assembly Line

Kiva Robot

Kiva Robots

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

121

Generalizable Robotics Represent A Potential $24+ Trillion Global
Revenue Opportunity
Manufacturing Robotics~2.3 Hours of Unpaid Work per Day

ARK Forecasts Global Manufacturing GDP
At ~$28.5 Trillion In 2030

×

Productivity Uplift
10%

25%

50%

100%

200%

400%

10%

286

714

1,429

2,857

5,715

11,430

20%

571

1,429

2,857

5,715

11,43022,860

50%

1,429

3,572

7,144

14,28728,57557,149~2.8 Billion Working Age Population

×~$10.75 Weighted Average Hourly Wage×
½ Value Attributed to Free Time vs Paid Time=~$12.5 Trillion Opportunity

Take Rate

ROBOTICSHousehold Robotics

Revenue Opportunity*(Billions)=~$12+ Trillion Opportunity(Average Of The Green Cells)*Note: the cells highlighted in green represent what ARK believes to be a reasonable or likely outcome. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data fromexternal sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation
to buy, sell, or hold any particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

122

Research By:

Tasha Keeney, CFA

Daniel Maguire, ACA

Director of Investment Analysis& Institutional Strategies

Research Associate

Robotaxis
Transforming Urban Transit
Safely And Affordably

Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

123

Thanks to breakthroughs in AI, robotaxis are beginning to revolutionize urban
travel and could accelerate the unraveling of the auto loan sector.
Safer than human drivers, robotaxis hold the promise of safer and cleaner streets.
Robotaxi platform pioneers should enjoy the higher prices associated with early
ROBOTAXIS

adoption.
According to ARK’s research, robotaxi platforms could redefine personal mobility
and generate $28 trillion in enterprise value during the next five to ten years.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

124

Autonomous Ride-Hail Is Likely To Increase Access To Convenient
Point-to-Point Transportation
Adjusted for inflation, the cost of owning and operating a personal car has not changed since the Model T rolled off the first
assembly line more than 100 years ago. ARK estimates that autonomous taxis at scale could cost consumers as little as $0.25 permile, spurring widespread adoption.
Cost Per Mile Of A Personally Owned Vehicle

ROBOTAXIS(2020 $)
$1.70

$0.70

1871

1934

$0.70

$0.70

1950

2016

$0.25

2030
2021

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

125

Robotaxi Passenger Trips Annualized At A Rate of ~2 Million Late Last Year
Robotaxis are operating in ~20 cities globally, with fully driverless commercial options in at least 7 cities. In 2023, Baidu wasoperating at a run rate of 1.6 million autonomous trips,* triple those of Waymo. Cruise has ceased US operations. With access to
50x more driving data than Baidu and 280x more than Waymo, Tesla has a massive data advantage as it prepares to launch its
robotaxi service, the largest AI project in the world.
Autonomous Miles
Run Rate

Run Rate
800
Million Miles (Annualized)

1.8
Million Rides (Annualized)

ROBOTAXIS

Autonomous Rides

1.6
1.4
1.2
1.0
0.8
0.6
0.4

700
600
500
400
300
200

0.2

100

0.0

Baidu

Waymo

Tesla

Cruise

Baidu

Waymo

Tesla

Cruise*This includes only the 55% of rides that are fully autonomous at Baidu. The chart on the right assumes 5 miles per trip for Waymo, Cruise, and Baidu. Tesla miles in righthand chart are FSD miles and still require a human behind
the wheel. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be
relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

126

Autonomous Vehicles Are Safer Than Human-Driven Vehicles
In 2015, ARK estimated that the rate of autonomous vehicle accidents would be ~80% lower than that associated with humandrivers, reducing the ~40,000 auto-related fatalities per year in the US and the ~1.35 million globally. Current data support our
original estimates.
In full self driving (FSD) mode on surface streets, a Tesla appears to be ~5x safer than a Tesla in manual mode, and ~16x safer than
the national average. Waymo’s autonomous cars are ~2-3x safer than the national average, while Cruise—now sidelined by

ROBOTAXIS

regulators—seems to have underperformed the national average considerably.
Miles Between Crashes On Surface Streets Only
(Thousands)
3,200

588

Tesla in FSD(2023)

476

192

43

Human
Driven Tesla
Human-Driven
Tesla
(avg
2022)
(avg 2022)

Waymo

National Average

Cruise(2023)(2021)(2023)ARK Adjusted

Company Adjusted

ARK Adjusted

Company Adjusted

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including CDC 2024, Kusano 2023, NHTSA 2023, Tesla 2023, 2024, and Zhang, 2023, which may beprovided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular
security. Past performance is not indicative of future results.

127

Autonomous Electric Transport Should Save The ~10,000 US Lives Per Year
Lost To Vehicle Emissions
Air pollution from gas-powered passenger vehicles is associated with 9,700 deaths in the US annually. According to ARK’sresearch, autonomous electric vehicles should prevent ~10,000 deaths in 2030.*
Incremental Lives Saved In The US By Lower Emissions Associated With Electric And Autonomous Vehicles

Number Of Deaths Avoided

ROBOTAXIS

12,00010,000
8,000
6,000
4,000
2,000
2024

2025

2026

2027

2028

2029

2030

*This analysis is based on ARK’s autonomous electric vehicle adoption forecast and adjusted for population growth. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying datafrom external sources, including Thakrar et al. 2020, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

128

Large Language Models and Generative AI Should Accelerate The Progress
In Robotics
Trained by GPT-4 to perform robotics tasks, a neural network performed better than human expert coders on 83% of tasks, withthe margin of improvement averaging 52%.
Large Language Models (LLMs) enable text-based training, validation, and self-explanations, which should facilitate regulatory
approval.
Multimodal models can train autonomous vehicles with images and text, which could result in better performance.
Generative AI can train and validate autonomous vehicle safety through simulation.

ROBOTAXIS

LLM-Driven Reinforcement Learning Outperforms Expert Human Coders
Across Various Robotics Tasks, Environments, And Morphologies
Eureka (LLM-based reward design with little manual input, zero-shot rewards)
L2R (LLM-based reward design with manual reward template s, few-shot examples)

Human Normalized Score

Human

12.65 12.64

2.07

2.06
1.66

1.42

1.24

0.88

1.09 0.99

1.06

1.00 1.00

1.00 1.00

Task 8

Task 90.56-2.04
Task 1

Task 2

Task 3-1.04
Task 4

Task 5

Task 6

Task 7

Task Legend:
Task 1: To open the cabinet door
Task 2: To make the hand spin the object
toward a target.
Task 3: To make the humanoid run as fast as
possible.
Task 4: To make the ant run forward as fast as
possible.
Task 5: To make the shadow hand spin theobject toward a target.
Task 6: To make the quadruped follow
randomly chosen x, y and yaw target velocities.
Task 7: To make the quadcopter reach andhover near a fixed position.
Task 8: To balance a pole upright on a cart.
Task 9: To stabilize a ball on the table-top.

Note: Yaw is rotation along the vertical axis of an aircraft. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including Ma et al. 2023 and Wayve 2023,
which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

129

Ride-Hail Is Likely To Create An $11 Trillion Addressable Market
At $0.25 cents per mile, autonomous transportation could serve a wider population than human-driven ride-hail does today. In
the meantime, based on the value that consumers place on their time, demand at higher price points could be significant.

Ride-Hail Addressable Market*
$4.50
$4B

4.00

3.00

2.00

1.10

0.60

0.50

0.25

markets charging $2-$4 per mile

$3.50
$30B

$3.00
Price Per MileROBOTAXIS$4.00

Price Points ($):

$34B: Existing addressable market for
ride-hail companies in Western$1T: Addressable ridership in Western markets at ~$1

$2.50
$2.00

$100B

$1.50

$2.4T: Non-commuting miles in higher income
countries priced at ~$0.60 per mile
$2.75T: Long tail of demand priced at human driven ridehail prices of $0.50 per mile in lower income countries

$1.00
$0.50
$0.00
0

1

5

$5T: Low cost, accessible autonomous
travel at $0.25 per mile

30

10
Miles (Trillions)*$11 Trillion is the addressable market, not the revenue we expect in 2030, as we do not expect autonomy to penetrate all addressable miles. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a
range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment
advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

130

Platforms Facilitating The First 50% Of Urban Autonomous Miles Should
Generate The Bulk Of Earnings
Autonomous Platforms’ Share Of Earnings Potential
Vs. Penetration Of Urban Miles

120%

80%

Share Of Earnings

ROBOTAXIS

100%

60%

40%

20%

0%
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Penetration Of Urban Miles
Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

131

Autonomous Electric Vehicle Adoption Could Disrupt The US Auto
Loan Industry
During the past three years, interest rate hikes have increased new vehicle monthly car loan payments by ~27%, from $581 to $739. As a result, thenumber of subprime auto loans delinquent by 60+ days recently hit an all-time high.
Thanks to Wright’s Law, EV prices should continue to fall, shifting more miles onto electric platforms and decreasing the value of gas-powered vehicles.
As a result, the ~$1.6 trillion in auto loans currently sitting on financial institution balance sheets, issued predominantly for gas-powered vehicles, could
be at risk over the next 10 years.

ROBOTAXIS

Auto Loan 60+ Delinquency
Subprime

Prime

6%

Auto Vehicle Fleet Composition(Trillions Of Dollars)*
Motor Vehicle Loans Owned And Securitized By Banks
Motor Vehicle Loans On Consumer Balance Sheets (ARK Estimate)

Percent Of Loans

5%
4%
3%
$1.3 T2%$1.6 T

1%

1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023

0%

Note: Wright’s Law states that for every cumulative doubling of units produced, costs will fall by a constant percentage. *Motor Vehicle Loans Owned and Securitized data as of Q3 2023. ARK Investment Management LLC,
2024. This ARK analysis is based on a range of underlying data from external sources, as of January 3, 2024, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

132

Autonomous Platform Providers Could Create ~$28 Trillion In Enterprise
Value In 2030
At 15x EBIT in 2030, autonomous platform providers could scale to $28 trillion in enterprise value, or ~9x that of all auto
manufactures in 2023.
Revenue, Earnings And Enterprise Value

Revenue, Earnings, And Enterprise Value

2030 ARK Estimates

2023 Actual Auto Manufacturers

ROBOTAXIS

Autonomous Electric$12,000$30,000$10,000$25,000$8,000$20,000$6,000$3,100$2,750$2,000

Revenue

EBITEnterprise Value

28,100$15,000$10,000$5,000$200$-$ Billions$ Billions

Autonomous Platform Providers

Auto Manufacturers$14,000$4,000Fleet Owners

900

3,200 3,800$0Revenue (Net)

100 400
EBIT

1,900

1,400 2,200
Enterprise Value

Numbers are rounded. EBIT = Earnings Before Interest and Taxes. Autonomous Platform Operators = Autonomous Ride-hail Companies, such as Waymo or Tesla. The chart on the left includes all publicly listed automakers
with available CAPIQ data on Enterprise Value, Revenue, and Operating Income. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may
be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

133

Research By:

Tasha Keeney, CFA

Daniel Maguire, ACA

Director of Investment Analysis& Institutional Strategies

Research Associate

Autonomous
Logistics
Reducing Costs And
Reshaping Supply Chains
Sources: ARK Investment Management LLC, 2024 Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

134

Autonomous logistics should reduce the cost of moving goods by 15-fold during
the next five to ten years. Autonomous drones and robots have made millions ofdeliveries, while autonomous trucking companies have logged tens of millions of

AUTONOMOUS LOGISTICS

miles and are beginning to remove safety drivers.
AI is proving superior to human pilots and drivers, encouraging regulators toallow truly autonomous operations that will change shopping behavior.
Autonomous vehicles should impact health care by accelerating the delivery oflife-saving supplies, particularly in emerging markets.
According to ARK’s research, autonomous delivery revenues could scale fromessentially nil today to $900 billion in 2030.

Sources: ARK Investment Management LLC, 2024 Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

135

Autonomous Vehicles That Roll And Fly Could Lower Supply Chain Costs
DramaticallyAccording to our research, autonomous vehicles should operate at higher utilization rates than human-in-the-loop systems,
creating more cost-effective last-mile delivery systems.

AUTONOMOUS LOGISTICS

Truckload Delivery Cost
(Per Ton-Mile)

Local Batch Delivery Cost
(Per Trip)

Local Small Item Delivery Cost
(Per Trip)

-57%
-83%

$0.07

$5.40

$2.40

$0.03

$0.35

$0.40
Human-Driven

Autonomous

Diesel Truck

Electric Truck

Human-Driven
VehicleDelivery

RollingRobot
Integrated
DeliveryTraffic Robot
Delivery-94%

Human-Driven

Drone

App Delivery

Delivery

Note: Drone price per mile has been updated with our latest assumptions for replacement costs, launching and charging infrastructure, insurance, and labor costs. Fees for drone and robot delivery are shown net of infrastructure costs(outside of charging and launch/land), which we believe could either be born by the drone or robot delivery operators or shared with logistics or retail partners. ARK Investment Management LLC, 2024. This ARK analysis is based on a
range of underlying data from external sources as of December 7, 2023, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

136

Proprietary Data Is Likely To Determine Commercial Success In
Autonomous Logistics
Companies with more real-world data should have a competitive advantage. Verticalization and manufacturing partnerships also
will be critical to success.

AUTONOMOUS LOGISTICS

Matternet
DroneUp

200

Aurora*Nuro895,000

Serve

20,000Embark

1,500,000

Gatik

1,500,000

110,000

Manna Drone

150,000

Meituan

184,000

Wing
ZiplineFully Autonomous

Cumulative Number of Deliveries

Cumulative Miles Traveled

Cumulative Number Of Commercial Flights

AmazonRolling Robots

Autonomous Trucks

DronesPony.ai

350,000

890,000

Human In The Loop

Robotics
Kiwibot*

Starship

1,900,000

Kodiak

2,500,000
Fully Autonomous

Human In The Loop

20,000 *70,000300,000

5,000,000
29,000,000

Alibaba
Fully Autonomous

Human In The Loop

Note: All truck miles traveled are latest available real-world reported miles; Gatik Class 6 trucks have operated commercially without a safety driver in some instances and the dashed navy lines are a
representation of this. *Figures estimated based on available data. Robot delivery companies have different package capacities per robot, so some can make more deliveries per run than others. Sources: ARK
Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources as of January 11, 2024, which may be provided upon request. Forecasts are inherently limited
and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicativeof future results.

137

AI Pilot Performance Seems Superior To That Of Human Pilots
AI pilots have immense data advantages over humans. Zipline drones have logged more commercial flight miles than would havebeen possible by humans.
In head-to-head simulated F-16 dogfights with a human expert fighter pilot, Shield AI won 5-0.*
In drone races, AI trained by deep reinforcement learning outperformed professional human pilots 15 out of 25 times, with lap

AUTONOMOUS LOGISTICS

times ~10% faster.
Competitive Wins
AI Pilot

Flight Hours

Human

769,000
15
10

5
0

1,500

65,800F-16 DogfightDrone Racing

FAA Airline Pilot

Commercial Human

Zipline Commercial

Simulated

Competition

Training Requirement

Pilot Flight Hours

Hours (Fleet(US Defense Advanced Research
Projects Agency (DARPA) Challenge,
Shield AI vs. Expert F-16 Pilot, 2020)*(University of Zurich Researchers vs.
International Drone Racing
Champions, 2023)(Career Maximum Per

Cumulative)

Federal Age andFlight Hour
Restrictions)*Note: Heron Systems, now part of Shield AI, won the dogfight. ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources as of December 7, 2023, which may beprovided upon request. Numbers are rounded. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

138

Autonomous Drones Should Reduce Food Delivery Costs, Thanks To
Regulatory Approvals
Boosted during and after COVID, food delivery fees have doubled the average cost of baseline menu orders.
Beyond line-of-sight drones without visual observers should reduce food delivery costs dramatically, thanks to recent FAA

Drone Delivery Price

Food Delivery Costs (Pre-Tax)
Meal(10-mile Trip)

Delivery Cost

$24

$18

Average Dollars Per Order

AUTONOMOUS LOGISTICS

approvals.

$16

~50%

$14
$12

$12

$10
$8

~90%

$6
$4
$2

$0.35

$0
Meal

App Delivery

Self Pickup

DronesRolling(at scale)

RobotsWithLine-Of-Sight
Line of Sight
With

With Visual Observer

Autonomous(at scale)Note: Numbers are rounded. ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources as of December 7, 2023, which may be provided upon request. Forecasts
are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is
not indicative of future results.

139

Drones Are Saving Lives
In geographies without road infrastructure, Zipline drones can deliver blood in fewer than 15 minutes, improving the mortality
associated with post-partum hemorrhages by 80%.

AUTONOMOUS LOGISTICS

Postpartum Hemorrhage Mortality Rate
Before And After Drone Delivery Of Blood Transfusions In Rwanda
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Before Drone Delivery

Drone Delivery
delivery > 30 Minutes
minutes
Drone

Drone Delivery
delivery 15-30 minutes
MinutesDrone Delivery
delivery < 15 minutes
Drone
Minutes

Sources: ARK Investment Management LLC, 2024, based on data from Jeon et al. 2022. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment
advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

140

Autonomous Food And Parcel Delivery Could Create A $1-2 Trillion
Addressable Market
Addressable Market For Last Mile Autonomous Food and Parcel Delivery*$3.50-$15.50

Price Per Trip

AUTONOMOUS LOGISTICS$250B: Addressable Market For Parcel and Food
Delivery In High-Cost Markets at $3.50-15.50 Per Trip

$450B: Additional Demand in High-Cost
Markets Based On Consumer’s Value of Time
$400B: Additional Demand For Parcel and Food
Delivery In Low-Cost Markets at $0.60-1.50 Per Trip

$2.00-$2.90$200B: Additional Demand in Low-Cost Markets
for Autonomous Delivery of $0.35-0.40 Per Trip

$0.60-$1.50$0.35-$0.40
250B

700B

1.1T

1.3T

Cumulative Number Of Delivery Trips*Numbers in the graph are rounded. $1-2 Trillion is the addressable opportunity, but total revenues / market size by 2030 will depend on penetration rates, which are detailed in slides below. ARK Investment
Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources as of December 7, 2023, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

141

Global Autonomous Delivery Revenue Could Reach $900 Billion by 2030
Robot and drone food and parcel delivery fees could reach $450 billion in 2030, as affordable technology-enabled delivery
reshapes consumer habits. Meanwhile, autonomous trucking revenues could reach $450 billion in 2030, as autonomous trucks

AUTONOMOUS LOGISTICS

coupled with drones and robotics transform the way that businesses transport goods cost effectively and quickly.
Autonomous Delivery Revenue($ Billions, 2030)
ParcelsFood

All Goods

150

450
300

Robots & Drones

TrucksLast Mile

Middle Mile

Note: ARK updates its research models often and most recently adjusted the adoption curve for autonomous technology, which resulted in a lower market forecast than previously estimated. ARK Investment Management
LLC, 2024. This ARK analysis is based on a range of underlying data from external sources as of December 7, 2023, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

142

Autonomous Logistics Could Double The Enterprise Value Of Precision
Agriculture
Thanks to continued automation and yield improvements enabled by breeding, transgenics, and agricultural biologics, theoperating cost per bushel produced—a metric incorporating both cost and yield—could decline by ~30% across major US crops.*
Agricultural companies with per-acre business models could generate autonomous platform fees on the cost savings from thescale.**US Farm Operating Cost Per Bushel for Major Crops*

Global Agricultural And Farm Machinery
Enterprise Value

Farm Operating Costs Per Bushel
Autonomous Platform Fee Per Bushel
$700

$4.50
$4.00

$600

-30%

$3.50

$ Billions$/Bushel

AUTONOMOUS LOGISTICS

technology, achieving software-like margins. As a result, their collective enterprise value could roughly double to ~$600 billion at

$3.00
$2.50
$2.00
$1.50

$500

~2X

$400
$300
$200

$1.00

$100

$0.50

$0

$2022

At Scale(ARK Estimate)2023

At Scale(ARK Estimate)*This analysis focuses on “Major Crops”—Corn, Soybean, and Wheat—which ARK defines as the top three crops in the US based on bushel production. Numbers are rounded. **When accounting for different cost compositions andadoption rates globally. This assumes a 50% autonomous platform fee and a 19X EV/EBITDA multiple on autonomous service earnings. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range ofunderlying data from external sources, using the latest available data as of January 4, 2024, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only andshould not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

143

Research By:

Sam Korus

Daniel Maguire, ACA

Director of Research,
Autonomous Technology& Robotics

Research Associate

Reusable
Rockets
Opening Outer SpaceFor Business
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

144

Reusable rockets are lowering launch costs dramatically, opening outer space forbusiness and creating new services like direct-to-device satellite connectivity.
According to ARK’s research, satellite connectivity revenues could reach $130 billion

REUSABLE ROCKETS

in 2030, still just a fraction of the roughly $2 trillion in telecommunications revenue.
Longer term, hypersonic flight point-to-point could generate revenues of ~$35 billion
in 2030, and potentially reach $350 billion at scale.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including CompaniesMarketcap.com 2024, which may be provided upon request. Forecasts
are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is
not indicative of future results.

145

Reusable Rockets Should Lower Launch Costs By An Order Of
Magnitude…Or Two!
SpaceX’s reusable rocket, Falcon 9, put an end to soaring launch costs. By reusing one Falcon 9 booster 19 times, SpaceX
increased its annual launch cadence nearly 60% to 96 in 2023.
SpaceX Launch Costs*

Rocket Launch Costs
Atlas V

Historical

Falcon 9

$210
$200
$164
$150
$118
$100
$71

$71
$50

$/kg to Low Earth Orbit, 2023 Dollars$250$ Millions, 2015 Dollars

REUSABLE ROCKETS

Soyuz

2006

2015

Forecast$100,000$10,000$1,000
$100
$10
$1
1

$-

2023e

100

10,0001,000,000

100,000,000

Cumulative Upmass(kg)*Forecast timeline dependent on the speed of development of SpaceX's Starship. Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which may
be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

146SpaceX Is Refurbishing Rockets In Record Time
When the Space Shuttle cost ~$1.5 billion per launch, industry experts assumed that a reusable rocket would be impossible
economically. SpaceX then flipped the script.
According to ARK’s research, the first stage of the Falcon 9 cost <$1 million to refurbish. Now, rocket turnaround time should be

Falcon 9 Average Time Between Reuses

Rocket Turnaround Time
400

250

200

252

200
150
100

54

50

27

21

25

Number Of Days

300

250

356

350

Number Of Days

REUSABLE ROCKETS

proportional to the cost required to refurbish a rocket booster, the key metric in tracking launch cost declines.

150

100

50

Space Shuttle:

Space Shuttle:

First SpaceX

Average 1972-

Fastest 1985

Turnaround

FastestFastestFastestTime

Turnaround

Turnaround

Turnaround

Time

Time

Time

2011

SpaceX 2021

SpaceX 2022

SpaceX 2023
0
2016

2018

2020

2022

2024

Sources: ARK Investment Management LLC, 2024, based on data from NASA 2023 and SpaceX 2023a, 2023b as of December 11, 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes
only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

147

Lower Satellite Launch Costs Should Enable Continuous Global CoverageWith Low Latency
While latency precluded geostationary orbit (GEO) satellites from offering a compelling broadband internet solution, now
thousands of low-cost, low earth orbit (LEO) satellites can provide service with low latency, continuous global coverage, and

REUSABLE ROCKETS

direct-to-mobile device connectivity.

LEO~300 miles<40 ms latency
Debris will
fall back toearth within~5 years

GEO~22,000 miles
700 ms latency
Debris will fallback to earth
within 1,000+
years

Sources: ARK Investment Management LLC, 2024. based on data from Starlink 2023, SES/ViaSattelite 2023, NEONE 2023 . Forecasts are inherently limited and cannot be relied upon. For informational purposes only andshould not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

148

Starship Will Help The Starlink Constellation Achieve Its Potential
Starship’s payload capacity to LEO is ~5x that of the Falcon 9. While impressive, given the five-year life of its satellites, Starshipstill will have to fly every 3.5 days to maintain its target constellation of 42,000 Starlink satellites. As of January 2024, SpaceX has
a constellation of ~5,400 satellites.
Spacecraft Upmass

By Launch Cadence

Ex-SpaceX

Cadence

20,000

1,600
1,400

15,000kg Thousands

1,200

kg Thousands

REUSABLE ROCKETSSpaceX

Starship Annual Upmass
Capability By Launch

Falcon 9 Annual Upmass Capability

1,000
800
600

~80%

Upmass Necessary To Maintain A 42,000 Satellite Constellation
10,000

5,000

400
200

-

-

2023e

3.8

2.5

(2023 Cadence)(2024 Goal)

1

Days Between Launches

0.5

3.5
Days Between Launches

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including Brycetech 2023a, 2023b, 2023c, and McDowell 2024 as of January 23, 2024, which
may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

149

Small Launch Providers Proliferated But May Not Be The Winners In Space
After capital spending booms, industries tend to consolidate. In the space industry, while launch capability is critical, the larger
opportunity could be in the services enabled by low launch costs. Today, only 16 of the 186 small launch providers created since1996 are operational.
Stage Of Small Launch Providers
Created Since 1996

New Small Launch Providers Founded25

RetiredCancelled

Concept

Dormant

In Development >5 YearsIn Development <=5 Years

Operational
20

200
180

15

160
NumberNumber

10

140

16
42

120
100

43

80

5

60
40

0
1996
1997
1998
1999
2001
2002
2003
2004
2005
2006
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023

REUSABLE ROCKETS

30

20
0

43
15
18
9

Sources: ARK Investment Management LLC, 2024, based on data from NewSpace Index 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

150

Antenna Costs Continue To Decline
SpaceX currently produces user terminals for less than the $599 it charges customers. Lower antenna costs should enable SpaceX
to scale Starlink profitably.
Starlink Subscribers

Starlink Antenna Costs
2,500,000

2.3 million
Dec. 2023

Number(Log Scale)

2,000,000

Unit Cost

REUSABLE ROCKETS$10,000$1,000

$450
2028e

$100

1,500,000

1,000,000

500,000

1

100
10,0001,000,000 100,000,000
Cumulative Production(Log Scale)0200

Launch: February 2021

400

600

800

1000

1200

Days Since Starlink Launch

Sources: ARK Investment Management LLC, 2024, based on data from SpaceX as of September 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be consideredinvestment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

151

Satellite Connectivity Revenues Could Exceed $130 Billion Per Year
Annual Revenue*

Annual Addressable Market*

Direct to Device

8 billion$6~$48 Billion

Global Households
Without Access To
Broadband

600 Million$60~$40 Billion

RVs

11 Million$1,620~$18 Billion

Recreational Boats

8.5 million$1,620~$14 Billion

Commercial
Aircraft Fleet

25 Thousand$225,000~$6 Billion

Cruise Ships,
Warships,
Commercial Ships

100 Thousand$60,000~$6 Billion

Satellite Subscribers As Percent Of
Cellular Subscribers
100.000%

10.000%SpaceX direct to device with
T-Mobile, when at scale(Log Scale)

Addressable Subscribers*Satellite Subscribers As Percent Of Cellular Subscribers

REUSABLE ROCKETS

ARK believes direct to device capability will be adopted by all telecom operators over time.

1.000%

0.100%

0.010%

0.001%
1997

Total:

2007

2017~$132 Billion*Forecasts. Source: ARK Investment Management LLC, 2024. This ARK forecast is based on a range of data sources, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For
informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

2027
Forecast

152

By 2030, Hypersonic Flight Could Be A ~$35 Billion Market, Ready To Scale
To ~$350 Billion Longer Term
Building Blocks Of Addressable Market Forecast
According to the US Department of Transportation, leisure travelers arewilling to spend 60%-90% of their estimated hourly household income

Total number of airline passengers worldwide: 6.7 billion

to save one hour.*
5% of flights are long-haul
REUSABLE ROCKETS

Compared to conventional flights that can take 28 hours roundtrip, ARK
estimates that hypersonic flights could take just 6 hours, saving eachtraveler ~22 hours.

Number of passengers on long-haul flights: ~335 million
5% of passengers are first-class

Given the typical cost and potential time savings, ARK’s researchsuggests that a first-class passenger should be willing to spend $44,000
roundtrip for a hypersonic flight.

Number of passengers flying first-class: ~16 million
50% adoption at maturity

If launch costs decline in line with ARK’s expectations, early adopters of

Number of passengers flying hypersonic: ~8 million

hypersonic flight could generate $35 billion revenue by 2030.
$44,000 roundtrip ticket

110kg

StarshipRoundtripPrice$200/kgto LEO2$44,000

Annual addressable market: ~$350 billion*Forecast. Sources: ARK Investment Management LLC, 2024. This ARK forecast is based on a range of data sources, including Brycetech and Saic 2021, which may be provided upon request. Forecasts are inherently limited andcannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

153

Research By:

Tasha Keeney, CFA

Daniel Maguire, ACA

Director of Investment Analysis& Institutional Strategies

Research Associate

3D Printing
Reshaping
Manufacturing
Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy,sell, or hold any particular security. Past performance is not indicative of future results.

154

In automotive manufacturing, 3D printing has lowered both the part count and the productdevelopment timeline dramatically. As a result, automakers can carry less inventory and saveon tooling costs.
In healthcare, 3D printing is making novel surgeries possible with customized guides, tools,

3D PRINTING

and implants.
3D printing also should provide positive environmental benefits relative to traditional
manufacturing.
Thus far, companies using 3D printing have benefited more than the 3D printing equipment
manufacturers. In the future, data feedback loops could change that dynamic.
According to ARK’s research, 3D printing revenues could scale ~40% at an annual rate during
the next seven years, from ~$18 billion today to ~$180 billion in 2030.

Note numbers are rounded. Sources: ARK Investment Management LLC, 2024. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice
or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

155

Thanks To 3D Printing, Automotive Production Has Entered Unchartered
Territory
Reportedly, Tesla is experimenting with 3D printed sand molds to cast auto underbodies that could substitute one part for 400
parts, lowering automotive development timelines and mold design validation costs by 50% and 97%, respectively. 3D printing
could play a role in the production of every car.

Vehicle Development Time

Design Validation Cost
2.0

3-4 Years

-50%

1.5

18-24
Months$ Millions

3D PRINTING

400 parts à 1 casting

1.0

-97%
0.5

0.0

Historical
Average

Average
With 3D Printing

Metal Mold

3D Printed Sand Mold

Imagery sourced from Lambert 2022. Sources: ARK Investment Management LLC, 2024, based on data from Shirouzu 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only andshould not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

156

3D Printing Has Played A Role In Medical Breakthroughs
In fewer than 24 hours after identifying the donor,

Across a range of surgeries, 3D printed tools, guides, and models

Materialise 3D printed pivotal surgical tools and guides

increased performance, as measured by surgical accuracy andused in the world’s first eye transplant. Speed to operation

results, by ~40-50% and reduced operating time on average byis critical to preserving donor tissue deprived of blood~30%.
During Surgeries, 3D Printed Tools, Guides, andModels Shorten Time And Improve Accuracy

supply.

Preoperative Planning
3D PRINTING

Surgical Tool/Guide+/- Standard Error

Percent Improvement

80%
60%
40%
20%
0%
-20%
-40%
-60%

Donor

Patient

PerformanceTime

Note: Time Savings and Accuracy Improvements Provided by 3D Printed Surgical Guides and Preoperative Planning
Aides: bars represent the average percent improvement in time or performance as described in Bergmann et al. 2017
and Woodard et al. 2019, N=6-9 for each sample group. Error bars represent +/- standard error. The above analysis
was conducted across medical fields; however, oral maxillofacial surgery and musculoskeletal studies were themost prevalent.

Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, including Diment et al. 2017, Meara et al. 2015, and Dobson 2020
as of January 17, 2024, which may be provided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or arecommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

157

Thus Far, 3D Printing Has Benefited Users More Than SuppliersSpaceX uses 3D printing every day to make parts for Starship’s Raptor engines. Today, the operating margins of SpaceX’s launchand satellite business are superior to those of any 3D printing supplier. Industrial companies benefiting from 3D printing could
vertically integrate to sustain their competitive advantages.

Velo3D And SpaceX
2023 Estimates In Thousands
3D PRINTING

Velo3D

A SpaceX Super Heavy Booster With 33 Raptor Engines:

SpaceX$180,000$108Enterprise Value$103$9,000

Revenue-$71$3,000EBIT

Velo3D is a 3D-printer manufacturer specializing in support-free powder bed fusion. Sources: ARK Investment Management LLC, 2024, based on data from S&P Capital IQ, 2024. SpaceX Heavy Booster Illustration sourced
from Ali 2021. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.
Past performance is not indicative of future results.

158

Software-Defined 3D Printers Could
Shift Some Economics Back To
Printer Manufacturers

Real Time Printing Data From
Sensors on Customer Printers:
Geometry
Temperature
Moisture

Sent To 3D PrinterManufacturer

With sensor-equipped 3D printers, 3D printing equipment
Over-The-Air
Updates Improve
Each Print

manufacturers can collect data from customer print jobs andimprove their fleets of printers in the field with over-the-air
3D PRINTING

software updates. This data feedback loop could help 3D
Margin Structure
3D Printing Manufacturers Vs. Mature Tools Company

printing companies capture more economics than they dotoday.
While companies may be reluctant to share data, AI-enabledmanufacturing solutions should create better outcomes for3D printing equipment companies and their customers

Gross Margin

EBITDA Margin

50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
Average of 3D Printer Manufacturers

Illinois Tool Works(Latest 12 Months)(Latest 12 Months)

EBITDA: Earnings before interest, taxes, depreciation, and amortization. Sources: ARK Investment Management LLC, 2024, based on data from S&P Capital IQ, 2024. Forecasts are inherently limited and cannot be relied
upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

159

3D Printing Revenues Could Grow ~40% At An Annual Rate To $180 Billion
By 2030
Revenue By Industry
Select Industries Using 3D Printing

3D Printing Revenue Forecast(Latest 12 Months As of 1/18/24)

$200
$4.0

$180

$3.5
$3.0

$ Trillions$140$ Billions

3D PRINTING

$160

$120

$2.5
$2.0
$1.5
$1.0
$0.5

$100

$-

$80
$60

Automobiles andAerospace and

Health Care

Components

DefenseEquipment andFootwearSupplies$40

Company
Examples:

$20
$2023

2024

2025

2026

2027

2028

2029

2030

Tesla
Volkswagen
Ford
General Motors
BMWSpaceX
Lockheed Martin

Stryker
Align

Nike
Adidas

Note numbers are rounded. Sources: ARK Investment Management LLC, 2024 and S&P Capital IQ, 2024. This ARK analysis is based on a range of underlying data from external sources as of January 17, 2024, which may beprovided upon request. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any
particular security. Past performance is not indicative of future results.

BIG IDEAS 2024

160

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163

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DISCLOSURE

Please note, companies that ARK believes are capitalizing on disruptive innovation and developing technologies to displace older technologies or create new markets
may not in fact do so and/or may face political or legal attacks from competitors, industry groups, or local and national governments.
ARK aims to educate investors and to size the potential opportunity of Disruptive Innovation, noting that risks and uncertainties may impact our projections and researchmodels. Investors should use the content presented for informational purposes only, and be aware of market risk, disruptive innovation risk, regulatory risk, and risks
related to Deep Learning, Digital Wallets, Battery Technology, Autonomous Technologies, Drones, DNA Sequencing, CRISPR, Robotics, 3D Printing, Bitcoin, Blockchain
Technology, etc. Cryptocurrency Risk. Cryptocurrencies (also referred to as “virtual currencies” and “digital currencies”) are digital assets designed to act as a medium of
exchange. Cryptocurrency is an emerging asset class. There are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency generally operates
without central authority (such as a bank) and is not backed by any government. Cryptocurrency is not legal tender. Federal, state and/or foreign governments may restrict
the use and exchange of cryptocurrency, and regulation in the U.S. is still developing. The market price of bitcoin and other cryptocurrencies have been subject to extreme
fluctuations. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are
susceptible to theft, loss and destruction. Cryptocurrency exchanges and other trading venues on which cryptocurrencies trade are relatively new and, in most cases, largely
unregulated and may therefore be more exposed to fraud and failure than established, regulated exchanges for securities, derivatives and other currencies. Cryptocurrency
exchanges may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which may also affect the price of cryptocurrencies.
Cryptocurrency Tax Risk. Many significant aspects of the U.S. federal income tax treatment of investments in bitcoin and other cryptocurrencies are uncertain and still
evolving.
The content of this presentation is for informational purposes only and is subject to change without notice. This presentation does not constitute, either explicitly or
implicitly, any provision of services or products by ARK and investors are encouraged to consult counsel and/or other investment professionals as to whether aparticular investment management service is suitable for their investment needs. All statements made regarding companies or securities are strictly beliefs and points ofview held by ARK and are not endorsements by ARK of any company or security or recommendations by ARK to buy, sell or hold any security. Historical results are notindications of future results. Certain of the statements contained in this presentation may be statements of future expectations and other forward-looking statementsthat are based on ARK's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events
to differ materially from those expressed or implied in such statements. The matters discussed in this presentation may also involve risks and uncertainties describedfrom time to time in ARK's filings with the U.S. Securities and Exchange Commission. ARK assumes no obligation to update any forward-looking information contained inthis presentation. Certain information was obtained from sources that ARK believes to be reliable; however, ARK does not guarantee the accuracy or completeness of
any information obtained from any third party. ARK and its clients as well as its related persons may (but do not necessarily) have financial interests in securities or
issuers that are discussed.
ARK Investment Management LLC